Class 12 Accountancy MCQs Cash Flow Statement

Questions are given here that are based on examination for practice by the students to prepare for final exams to score high.

  1. Decrease in Bank Overdraft is shown under which heading in a Cash Flow Statement?

a) Operating

b) Financing

c) Investing

d) Cash and Cash Equivalent

2. Which of the following transactions would result in inflow of cash:

a) Cash withdrawn from Bank for office use.

b) Purchase of machinery worth ₹ 2,00,000 and issued shares in consideration thereof.

c) Sale of furniture for ₹ 3,000 to Mr. Mohan.

d) Cash received from Debtors ₹ 6,000.

3. CAE Ltd. earned profit of ₹1,00,000 after charging depreciation of ₹20,000 on assets and transfer to General Reserve of ₹30,000. Goodwill amortised was ₹7,000 and gain on sale of machinery was ₹3,000. Additional Information: Changes notes at the end of the year, Trade Receivables- increase ₹3,000, Trade Payables - increase ₹6,000, Prepaid Expenses - increase ₹200 and Outstanding Expenses - decrease ₹2,000. Cash Flow from Operating Activities will be:

a) ₹1,50,000

b) ₹1,54,800

c) ₹1,52,600

d) ₹1,60,200

4. Which of the following equations is correct:

a) Cost of Revenue from Operations = Revenue from Operations + Gross Profit

b) Cost of Revenue from Operations = Opening Inventory Net Purchases + Direct Expenses - Closing Inventory

c) Cost of Revenue from Operations = Opening Inventory + Closing Inventory

d) Cost of Revenue from Operations = Revenue from Operations - Gross Profit

5. Decrease in Bank Overdraft is shown under which heading in a Cash Flow Statement?

a) Operating

b) Financing

c) Investing

d) Cash and Cash Equivalent

6. Which of the following transaction does not result in Inflow or outflow of cash and cash Equivalents?

a) Collection of cash from trade receivables

b) Payment to trade payables

c) Cash received on maturity of marketable securities

d) Payment to employees

7. Read the following information:

31st March 2023               31st March 2024

Equipment (Cost)                                           ₹ 20,00,000                       ₹ 30,00,000

Accumulated Depreciation                           ₹ 4,80,000                         ₹ 5,90,000

During the year equipment worth ₹ 2,00,000 was sold for ₹ 1,10,000. Depreciation charged during the year was ₹ 1,50,000. Determine the amount to be shown under non-cash and non-operating expenses while preparing cash flow statement.

a) ₹ 1,50,000

b) ₹ 2,00,000

c) ₹ 2,40,000

d) ₹ 50,000

8. Assertion - Purchase of Fixed Assets is classified as Investing Activity in case of all enterprises. Reason - Payment of Dividend on shares is classified as Financing Activity in case of all enterprises. In the context of these two statements, which of the following is correct:

a) Assertion is correct but Reason is wrong

b) Both Assertion and Reason are correct, but Reason is not the correct explanation of Assertion

c) Both Assertion and Reason are incorrect

d) Both Assertion and Reason are correct and Reason is the correct explanation of Assertion

9. Which of the following is not correct:

a) Operating Profit = Revenue from Operations - Operating Cost

b) Operating Profit = Net Profit + Non-operating Expenses-Non-Operating Income

c) Operating Profit = Gross Profit Other Operating Expenses + Other Operating Income

d) Operating Profit = Revenue from Operations-Cost of Revenue from Operations

10. For Cash Flow Statement, Bank Overdraft and cash credit are to be treated as:

a) Cash Equivalents

b) Non-Current Liabilities

c) Investing Activity

d) Short Term Borrowings

 

Class 12 Accountancy MCQs Cash Flow Statement

11. Which of the following transaction does not result in Inflow or outflow of cash and cash Equivalents?

a) Collection of cash from trade receivables

b) Payment to trade payables

c) Cash received on maturity of marketable securities

d) Payment to employees

12. While preparing cash flow statement, will ‘Cash withdrawn from bank’ result into inflow, outflow or no flow of cash? Give reason in support of your answer.

a) Inflow of cash

b) Outflow of cash

c) No Flow of cash

13. Interest received in cash from loans and advance is considered as _____ activity while preparing cash flow statement.

a) Operating activity

b) Investing activity

c) Financing activity

14. While preparing Cash Flow Statement, write the sequence of treatment of following items:

  1. Payment of Premium on Redemption of Preference Shares.
  2. Transfer to General Reserve
  3. Depreciation on Machinery.

a) 2,3,1

b) 1,2,3

c) 2,1,3

d) 3,1,2

15. Statement I - Sale of Marketable Securities will result in no flow of Cash.

Statement II - Debentures issued as collateral security will result in inflow of cash:

a) Both Statements are correct

b) Both Statements are incorrect

c) Statement I is correct and Statement II is incorrect

d) Statement I is incorrect and Statement I is correct

16. What will be the effect of issue of Bonus shares on Cash Flow Statement:

a) No effect

b) Inflow in Financing Activity

c) Inflow in Operating activity

d) Inflow in Investing Activity

17. CTE Ltd. provides you that there’s 10% Bank Loan, on 31.3.2024 - Nil and on 31.3.2023 - ₹1,00,000. Additional Information: Equity Share Capital raised during the year ₹3,00,000. 10% Bank Loan was repaid on 01.04.2023. Dividend received during the year was ₹20,000. Dividend Proposed for the year 2022-23 was ₹50,000 but only ₹20,000 was approved by the Shareholders. Find out the cash flow from Financing Activities:

a) ₹ 1,50,000

b) ₹ 2,00,000

c) ₹ 1,70,000

d) ₹ 1,80,000

18. A company received insurance claim of 7,50,000 for repairing the building which was damaged due to earthquake. Expenses on repairing the building was 6,50,000. Balance ₹ 1,00,000 was shown as Other Income in the Statement of Profit & Loss. It will be shown in the Cash Flow Statement as follows:

a) Added to Net Profit before Tax and Extraordinary item under Cash Flow from Operating Activities and Outflow under Investing Activities.

b) Deducted from Net Profit before Tax and Extraordinary item under Cash Flow from Operating Activities and Inflow under Investing Activities.

c) Deducted from Net Profit before Tax and Extraordinary item under Cash Flow from Operating Activities and Inflow under Investing Activities as Extraordinary Item.

d) no adjustment will be made.

19. From the following information calculate cash from sale of machinery:

31st March 2024                 31st March 2023

Machinery                      ₹ 5,00,000          ₹ 3,00,000

Additional information:

Depreciation for the year ended 31st March 2024 ₹ 80,000

Purchase of Machinery during the year ₹ 4,00,000

Part of machinery was sold at a profit of ₹ 50,000

a) ₹ 2,00,000

b) ₹ 2,50,000

c) ₹ 3,00,000

d) ₹ 3,50,000

20. Which of the following will result in flow of cash?

a) Cash withdrawn from the bank ₹60,000

b) ₹1,00,000, 9% debentures issued to vendors of machinery

c) ₹35,000 received from debtors

d) Cheques of ₹ 40.000 deposited in the bank

 

Class 12 Accountancy MCQs Cash Flow Statement

21. An investment normally qualifies as cash equivalent only when it has a Short maturity, of………..from the date of acquisition.

a) Three months or more

b) Six months or less

c) One year or less

d) Three months or less

22. Which of the following is not an Investing activity?

a) Purchase of marketable securities for ₹20,000 cash.

b) Sale of building for ₹80,000 cash.

c) Sale of 500 shares (held as investment) for ₹55 each.

d) Purchase of Machinery for ₹5,00,000 cash.

23. Which of the following activities are operating activities for the purpose of preparing 'Cash Flow Statement'?

(i) Dividend and Interest received on securities.

(ii) Payment of employee benefits expenses.

(iii) Cash receipts from royalties and fees.

(iv) Issue of shares against purchase of machinery.

a) (i), (ii) and (iii)

b) (ii), (iii) and (iv)

c) (i), (ii) and (iv)

d) (ii) and (iii)

24. Statement I: - Sale of Marketable Securities will result in no flow of Cash.

Statement II: - Debentures issued as collateral security will result in inflow of cash.

a) Both Statements are correct.

b) Both Statements are incorrect.

c) Statement I is correct and Statement II is incorrect.

d) Statement I is incorrect and Statement I is correct.

25. Insurance Claim received by BT. Ltd. of ₹ 5,00,000 for Loss of Machinery due to theft will be recorded in Cash Flow Statement in which of the following manner?

a) Added under Operating Activities as Extraordinary Item and Subtracted from Operating Activities also.

b) Subtracted under Operating Activities as Extraordinary Item and Added to Operating Activities also.

c) Subtracted under Operating Activities as Extraordinary Item and Inflow under Investing Activities also.

d) Added under Operating Activities as Extraordinary Item and Outflow under Investing Activity also.

26. If the amount of goodwill is ₹ 40,000 at the beginning of a year and ₹ 48,000 at the end of that year then while preparing cash flow statement its effect on cash flow will be:

a) Cash received from operating activities

b) Cash used (payment) in investing activities

c) Cash used (payment) from operating activities

d) Cash used (payment) from financial activities

27. If a machine whose original cost is ₹ 60,000 having accumulated depreciation ₹ 22,000, were sold for ₹ 40,000 then while preparing cash flow statement its effect on cash flow will be:

a) Cash flow from financing activities ₹ 40,000

b) Cash flow from financing activities ₹ 38,0000

c) Cash flow from investing activities ₹ 40,000

d) Cash flow from investing activities ₹38,000

28. ST Ltd. purchased furniture for ₹ 2,00,000 paying 60% by issue of equity shares of ₹ 10 each and the balance by a cheque. This transaction will result in:

a) Cash used in investing activities ₹ 2,00,000.

b) Cash generated from financing activities ₹ 1,20,000.

c) Increase in cash and cash equivalents ₹ 80,000.

d) Cash used in investing activities ₹ 80,000.

 

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Class 12 Accountancy MCQs Cash Flow Statement - Answers

  1. b) Financing
  2. d) Cash received from Debtors ₹ 6,000.
  3. b) ₹1,54,800
  4. d) Cost of Revenue from Operations = Revenue from Operations - Gross Profit
  5. b) Financing
  6. c) Cash received on maturity of marketable securities
  7. c) ₹ 2,40,000
  8. b) Both Assertion and Reason are correct, but Reason is not the correct explanation of Assertion
  9. d) Operating Profit = Revenue from Operations-Cost of Revenue from Operations
  10. d) Short Term Borrowings
  11. c) Cash received on maturity of marketable securities
  12. c) No Flow of cash
  13. b) Investing activity
  14. a) 2,3,1
  15. c) Statement I is correct and Statement II is incorrect
  16. a) No effect
  17. d) ₹ 1,80,000
  18. c) Deducted from Net Profit before Tax and Extraordinary item under Cash Flow from Operating Activities and Inflow under Investing Activities as Extraordinary Item.
  19. a) ₹ 2,00,000
  20. c) ₹35,000 received from debtors
  21. d) Three months or less
  22. a) Purchase of marketable securities for ₹20,000 cash.
  23. d) (ii) and (iii)
  24. c) Statement I is correct and Statement II is incorrect.
  25. c) Subtracted under Operating Activities as Extraordinary Item and Inflow under Investing Activities also.
  26. b) Cash used (payment) in investing activities
  27. c) Cash flow from investing activities ₹ 40,000
  28. d) Cash used in investing activities ₹ 80,000. 

Class 12 Accountancy MCQs Ratio Analysis

Learning Games and Activities in Accountancy – Class 12