Online Test — Cash Flow Statement
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
A cash flow statement shows the inflows and outflows of:
Profit
Cash and cash equivalents
Stock
Capital only
Explanation: It tracks cash and cash equivalents.
Question 2 of 15
The cash flow statement is prepared as per:
AS-3 (Revised)
AS-26
Schedule III only
GST law
Explanation: AS-3 (Revised) governs the cash flow statement.
Question 3 of 15
Cash flows are classified into how many activities?
Two
Three
Four
Five
Explanation: Operating, investing and financing — three activities.
Question 4 of 15
Cash received from customers is an ____ activity.
Operating
Investing
Financing
None
Explanation: It relates to the main business — operating.
Question 5 of 15
Purchase of machinery is an ____ activity.
Operating
Investing
Financing
None
Explanation: Buying fixed assets is investing.
Question 6 of 15
Issue of shares for cash is a ____ activity.
Operating
Investing
Financing
None
Explanation: Raising owners' funds is financing.
Question 7 of 15
In the indirect method, operating cash flow starts from:
Sales
Net profit before tax
Cash balance
Total assets
Explanation: It starts with net profit before tax and adjusts.
Question 8 of 15
Depreciation in the indirect method is:
Subtracted
Added back
Ignored
A cash outflow
Explanation: It is a non-cash expense, added back.
Question 9 of 15
An increase in debtors is ____ in operating cash flow.
Added
Subtracted
Ignored
Financing
Explanation: Cash not yet collected, so subtract.
Question 10 of 15
An increase in creditors is ____ in operating cash flow.
Subtracted
Added
Ignored
Investing
Explanation: Cash retained, so add.
Question 11 of 15
Sale of a fixed asset is an ____ activity.
Operating
Investing
Financing
None
Explanation: Selling fixed assets is investing.
Question 12 of 15
Dividend paid by a company is a ____ activity.
Operating
Investing
Financing
None
Explanation: Dividend paid is a financing outflow.
Question 13 of 15
Interest received on investments is generally an ____ activity (non-finance firm).
Operating
Investing
Financing
None
Explanation: For a normal firm it is investing.
Question 14 of 15
Net increase in cash =
Operating + Investing + Financing flows
Operating only
Sales − purchases
Profit − tax
Explanation: Sum the three activities' flows.
Question 15 of 15
Closing cash must agree with the cash and bank balances in the:
Trial balance
Balance Sheet
Journal
Cash memo
Explanation: Closing cash equals the balance sheet's cash & equivalents.