Please refer to Chapter 6 Cash Flow Statement MCQ Class 12 Accountancy with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 12 Accountancy. Students should refer to MCQ Questions for Class 12 Accountancy with Answers to score more marks in Grade 12 Accountancy exams. Students should read the chapter Cash Flow Statement and then attempt the following objective questions.

MCQ Questions Class 12 Accountancy Chapter 6 Cash Flow Statement

Cash Flow Statement MCQ Class 12 Accountancy provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question: In indirect method, Which is used to calculate the amount of net cash flow from operating activities
a) Net income figure from the income statement
b) Net loss figure from Profit & Loss
c) Net Profit figure from Profit & Loss
d) All of the options

Question: Which is the Method for the preparation of cash flow statement
a) Both Direct and Indirect
b) Direct Method
c) Indirect Method
d) Average Method

Question: How many methods for the preparation of cash flow statement
a) 2
b) 3
c) 4
d) 5

Question: Under Cash Flow from Operating Activities incorporates are
a) Paid for operating costs 
b) Cash received from customers
c) Paid to suppliers
d) All of the options

Question: If the net profits made during the year are Rs. 50,000 and the bills receivables have decreased by Rs. 10,000 during the year then the cash flow from operating activities will be equal to Rs.
a) Rs. 60,000
b) Rs. 40,000
c) Rs. 70,000
d) Rs. 50000

Question: A cash flow statement is also prepared to determine the
a) Liquidity position of the organisation
b) Debt position of the organisation
c) Net Profit position of the organisation
d) Net Profit position of the organisation

Question: The most important objective of cash flow statement is that helps to ascertain the and outflows of cash and from
a) Outflows of cash 
b) Gross inflows
c) All of the options
d) Cash equivalents

Question: Refund of income tax is the part of
a) Operating activities in Cash Flow Statement
b) Financing Activities in Cash Flow Statement
c) Investing Activities in Cash Flow Statement
d) All of the options

Question: Rent received is classified under
a) Operating Activities
b) Investing Activities
c) Cash and Cash Equivalents
d) Financing Activities

Question: What are the objectives of preparing cash flow statement
a) To know about the requirement of cash in future
b) To determine the liquidity position of the organisation
c)  All of the options
d) To ascertain the gross inflows and outflows of cash

Question: When Company repurchases shares, pays dividends or pays off debt, it records a
a) Cash outflow
b) Cash inflow
c) Not related to cash
d) All of the options

Question: When the company issues new shares, it records a
a) Cash inflow
b) Cash outflow
c) Not related to cash
d) All of the options

Question: Cash flows from financing activities are those that take place between
a) Net profit & loss
b) Sundry Creditors and Sundry Debtors
c) Firm and its investors
d) All of the options

Question: Cash flows from investing activities are those
a) Intangible assets
b) Property
c) Plant
d) All of the options

Question: Cash flow statement is prepared from
a) Additional Information 
b) Balance sheet
c) Profit and Loss 
d) All of the options

Question: Cash from operation will decrease due to
a) Increase in Current assets
b) Decrease in Current assets
c) Increase in Current Liabilities
d) Decrease in Current Liabilities

Question: Which of the following transactions would result in neither cash inflow nor outflow of cash and cash equivalents.
a) Issue of share capital
b) Issue of bonus shares
c) redemption of debentures
d) Trade recievable realized.

Question: Sale of Copyrights is concerned with_______
a) Investing Activities
b) Operating Activities
c) Both Operating Activities and Financing Activities
d) Financing Activities

Question: Dividend Received is concerned with_________
a) Operating Activities
b) Investing Activities
c) Financing Activities
d) Both Operating Activities and Financing Activities

Question: The cash flow statement begins with the
a) Cash Flow from Investing Activities  
b) Cash Flow from Financing Activities
c) Cash Flow from Operating Activities
d) None of these

Question: The primary objective of cash flow statement is to provide useful information about
a) Cash Flow
b) Net Profit
c) Net Loss
d) All of the options

Question: A cash flow statement shows
a) Not related to cash 
b) Inflow cash
c) Outflow cash
d) Both Inflow and Outflow

Question: Which activities are the same for Computation of Direct and indirect method
a) Cash Flow from Operating Activities and Cash flow from Investment activities  
b) Cash Flow from Financing Activities and Cash flow from Investment activities
c) Cash Flow from Operating Activities and Cash flow from Financial activities
d) All of the options

Question: The main difference in direct and indirect method is to calculate the
a) Cash flow from operating activities
b) Cash Flow from Financing Activities
c) Cash Flow from Investing Activities
d) All of the options

Question: Expenses paid in advance at the end of the year are______________the profit made during the year
a) Deducted from
b) Added to
c) Divided to
d) All of the options

Question: Dividend received by Atal Pharma Limited will be a i.)………………………for the organization .and will be classifies as ii.)…………………activity.
a) Inflow,investing
b) Inflow,financing
c) Outflow ,financing
d) Inflow,Operating

Question: A company receives a dividend of X2 Lakhs on its investment in other company’s shares. In case of a Finance Company, it will be classified under which kind of activity?
a) Cash Flow from Investing Activities 
b) Cash Flow from Operating Activities
c) Cash Flow from Financing Activities
d) No Cash Flow

Question: How will you classify loans given by Tata Finance Company?
a) No Cash Flow 
b) Cash Flow from Investing Activities
c) Cash Flow from Financing Activities
d) Cash Flow from Operating Activities

Question: Issue of shares at a premium is shown as:
a) Inflow under Operating Activities.
b) Inflow under Financing Activities.
c) Inflow under Investing activity
d) Outflow under Financing Activities

Question: Dividend paid by non financing company is shown under:
a) Operating activity
b) Investing activity
c) Financing activity
d) Cash and cash equivalents

Question: If the net profits earned during the year is Rs. 50,000 and the amount of debtors in the beginning and the end of the year is Rs. 10,000 and Rs.20,000 respectively, then the cash from operating activities will be equal to Rs.
a) Rs. 40,000
b) Rs. 60,000
c) Rs. 70,000
d) Rs. 50000

Question: Total Sales Rs, 500000, Credit Sales Rs. 225000, Total Purchase Rs. 248000, Credit Purchase Rs. 108000, Cash Operating Exp Rs. 40000, Cash From Operation will be
a) Rs. 95000
b) Rs. 90000
c) Rs. 60000
d) RS. 70000

Question: Total sales Rs. 200000, Debtors at the beginning Rs. 15000, Debtors at the ending Rs. 28000, Cash Sale will be
a) Rs. 215000 
b) Rs 213000
c) Rs. 187000
d) Rs. 210000

Question: From the following information find the cash generated from operations:
Operating Profit before working capital changes 1,00,000
Depreciation on fixed assets 15,000
Loss on sale of Furniture 5,000
Interest paid 13,000
Dividend received
Increase in debtors 8,000
Decrease in stock 7,000
Increase in creditors 4,000
a) Rs 1,18,000
b) Rs 1,24,000
c) Rs 1,03,000
d) Rs 1,00,000

Question: A decrease in outstanding expense would result in
a) Decrease in cash balance
b) Increase in cash balance
c) Unaltered
d) Would change the current liabilities.

Question: Pick the odd one out
a) Long term borrowings
b) Reserves and surplus
c) Share capital
d) Public deposits. 

Question: Which of the following transactions would result in neither cash inflow nor outflow of cash and cashequivalents.
a) Issue of share capital
b) Issue of bonus shares
c) redemption of debentures
d) Trade recievable realized.

Question: From the following information find out the inflow of cashOffice Equipment `
31st March, 2014 60,000
31st March, 2013 1,00,000
` Additional Information:
Depreciation for the year 2013-14 is Rs 7,000, Purchase of office Equipment during the year Rs 10,000 Part ofOffice Equipment sold at a profit of Rs 6,000
a) Rs 48,000
b) Rs 49,000
c) Rs 44,000
d) Rs 33,000

Question: From the following information find out the cash flow from financing activities.
Liabilities
Proposed Dividend
31st March 2013 20,000
31st March 2014 15,000
Additional Information: Equity Share Capital raised 3,00,000 10% Debentures Redeemed 1,00,000 PreferenceShare capital Redeemed 50,000. Interim Dividend paid during the year 20,000
a) Rs 1,25,000
b) Rs 1,00,000
c) Rs1,50,000
d) Rs 1,30,000

Question: From the following information find out the inflow of cash
31st March, 2015 31st March, 2014
Plant and Machinery Account ` Rs6,00,000 Rs 4,50,000
Accumulated Depreciation ` Rs1,60,000 Rs 1,00,000
Additional Information: Depreciation for the year 2014‐15 is Rs 80,000. During the year Machinery was
Purchased for Rs 2,50,000 and a part of asset was sold at a profit of Rs 40,000.
a) Rs 1,20,000;
b) Rs 1,00,000;
c) Rs 80,000;
d) Rs40000

Question: From the following particulars, what will be the amount of provision for tax made during the year?
Provision for Taxation
31.3.2011 50,000
31.3.2012 40,000
The Company paid taxes Rs 45,000 for the year 2011-2012.
a) Rs 45,000
b) Rs 35,000
c) Rs 40,000
d) Rs 50,000

 

Question: Gain on sale of tangible current asset is an
a) Operating activity
b) Investing activity
c) Financing activity
d) Cash and Cash Equivalents

Question: Which of the following is an example of non cash Exp
a) Depreciation
b) Wages and salaries
c) Telephone Exp
d) All of the options

Question: If the net operating profit of a business is Rs. 90000 and the debtors have decreased during the year by Rs. 30000, cash from operation equal to
a) Rs. 120000
b) Rs. 90000
c) Rs. 60000
d) Rs. 50000

Question: Cash from operation will increase due to
a) Increase in Bills receivable 
b) Increase in stock
c) Decrease in stock
d) Decrease in Bills receivable

Question: Increase in the amount of bills receivable results in
a) All of the options 
b) Increase in cash
c) No change in cash
d) Decrease in cash

Question: Repayments of debenture is:
a) Operating Activity
b) Financing Activity
c) Investing Activity
d) None of these

Question: Increase in Bank Overdraft is
a) Investing Activity
b) Financing Activity
c) Operating Activity
d) Cash and Cash Equivalents

Question: Which of the following is not a cash outflow
a) Increase in outstanding Exp
b) Increase in Prepaid Exp
c) Increase in Stock
d) Increase in Bills receivable

Question: According to AS-3 (Revised) redemption of preference share is _______ activity
a) Operating 
b) Investing
c) Financing
d) All of the options

Question: Marketable securities is treated as ___________ in cash flow statement
a) Non Cash equivalent  
b) Cash equivalent
c) Both
d) All of the options

Question: For calculating cash flow from operating activities, provision for doubtful debts is __________the profit made during the year
a) Divided to  
b) Deducted from
c) Added to
d) All of the options

Question: Gain on sale of tangible non current asset is an
a) Operating activity
b) Investing activity
c) Financing activity
d) Cash and Cash Equivalents

Question: Which of the following shall be considered as an outflow of cash in cash flow statement.
a) Decrease in Public Deposits
b) Issue of share capital
c) Increase in accounts payable
d) Decrease in accounts receivables.

Question: An increase in accrued income during the particular year is ____________for calculating the cash flow from operating activities (added to/deducted from).
a) Added to
b) Deducted from
c) Divided to
d) All of the options

Question: An example of cash flow from investing activity is :
a) Issue of debenture
b) Repayment of long-term loan
c) Purchase of raw materials for cash
d) Sale of investment by non-financial enterprise

Question: An example of Cash Flows from Investing Activity is :
a) Cash Revenue from Operations
b) Commission Received
c) Payment of cash for purchase of fixed assets
d) Dividend paid

Question: An Example of cash flow from financing activity is :
a) Payment of dividend
b) Receipt of dividend on investment
c) Cash received from customer
d) Purchase of fixed asset

Question: How will you classify deposits by customers in Axis Bank?
a) Cash Flow from Operating Activities
b) Cash Flow from Investing Activities
c) Cash Flow from Financing Activities
d) No Cash Flow

Question: Which of the following transactions would result inflow of cash:
a) Cash withdrawn from Bank for office use.
b) Purchase of machinery worth Rs 2,00,000 and issued shares in consideration thereof.
c) Sale of furniture for Rs 3,000 to Mr. Mohan.
d) Cash received from Debtors Rs 6,000

Question. All of the following would be included in company`s Operating Activities except
a) Income tax payment
b) Collections from customer
c) Cash payment to suppliers
d) Interest on Current Investment

Question:Sale of current investment will be shown under
a) Operating Activity
b) Financing Activity
c) Investing Activity
d) Cash and Cash Equivalents

Question: Which of the following item is considered as Cash Equivalents?
a) Marketable Securities
b) Debtors
c) Investment
d) Bills of Exchange

Question: Which of the following is considered as Cash Equivalents?
a) Bank deposits for 2 months
b) Commercial Papers
c) Treasury Bills
d) All of the above

Question: Which of the following is not a cash inflow
a) Purchase of fixed assets
b) Sale of goods
c) Issue of debentures
d) Sales of fixed assets

Question: Acquisition of assets or Acquisition of an enterprise by means of issue of shares and debentures is _________ transaction
a) Both 
b) Cash
c) Non Cash
d) None of these

Question. Cash deposit with the bank with a maturity date after two months belongs to which of the following in the cash flow statement:
a) Investing activities
b) Financing activities
c) Cash and Cash equivalents
d) Operating activities

Question: Interest collected by an automobile company selling a car on instalment basis will be classified as
a) Investing activity
b) Operating activity
c) Financing activity
d) Cash and cash equivalents

Question: Expenses paid in advance at the end of the year are i…….in ……ii activities while preparing cash flow statement
a) Added,Operating
b) Subtracted,Operating
c) Added,Investing
d) Subtracted,Investing

Question. Which of the following is shown under Financing Activity?
a) interest paid
b) Commission Received
c) Cash received against sale of goods
d) Cash paid for purchase of goods

Question: Net Profit for the year Rs. 15000 , Interest Received in advance on 1st Jan 2004 Rs. 2000 and 31st December 2004 Rs. 3000, Cash from operation will be
a) Rs. 22000 
b) Rs. 16000
c) Rs, 13000
d) Rs. 15000

Question: Opening Stock Rs. 7000, Closing stock Rs. 10000, Cash Purchase Rs. 82000. Sales Rs. 125000 including credit sales Rs. 18000, Cash generated from operations Equal Rs.
a) Rs. 42000
b) Rs. 22000
c) Rs. 28000
d) Rs. 30000

Question: Which of the following is not included in Cash and Cash Equivalents?
a) Balances with Banks
b) Bank deposits with 100 days of maturity
c) Cheques and Drafts on hand
d) Cash on hand

Question: Which of the following is not part of Cash and Cash Equivalents?
a) Inventories
b) Current investments
c) Short-term Deposits
d) Marketable Securities

Question: ‘Koval Ltd! is a financing company. Under which activity will the amount of interest paid on a loan settled in the current year be shown?
a) investing Activities
b) Financing Activities
c) Both Investing and Financing Activities
d) Operating Activities

Questio GSC Ltd. purchased machinery of Rs. 10,00,000 issuing a cheque of Rs. 2,50,000 and 10% Debentures of Rs. 7,50,000. ln the Cash Flow Statement, the transaction will be shown as
a) Outflow under Investing Activity Rs. 10,00,000, inflow under Financing Activity as Receipt for Debentures Rs. 7,50,000
b) Outflow under investing Activity Rs. 2,50,000
c) Inflow of Rs. 7,50,000 as Financing Activity
d) None of the above

Question: Angel Ltd., a stock broker, purchased 5,000 shares of Tata Housing Ltd. it is
a) Operating Activity
b) Investing Activity
c) Financing Activity
d) General Activity

Question:  In case of financial enterprises cash flow from interest and dividend received and interest paid is classified as cash flow from.
a) Operating Activity
b) Investing Activity
c) Finances Activity
d) Cash and Cash Equivalents.

Question: From the following information, the outflow of cash for the purchase of machinery will be:
Written down value of machinery as on 1.4.2011 – Rs 5,00,000
Written down value of machinery as on 31.3.2012 -Rs7,00,000
Depreciation on machinery charged during the year Rs 60,000
Machinery having book value Rs 25,000 sold for Rs 20,000
a) Rs 2,70,000
b) Rs 2,80,000
c) Rs 2,75,000
d) Rs 2,85,000

Question: Which of the following transactions would not create a cash flow ?
a) A company purchased some of its own stock from a stockholder
b) Amortization of a patent
c) Payment of a Cash Dividend
d) Sale of equipment at book value

Question: Bank Overdraft and cash credit are to be treated as:
a) Cash Equivalents
b) Non Current Liabilities
c) Investing Activity
d) Short Term Borrowings

Fill in the Blanks

Question: Debentures issued for consideration other than cash are not shown in the Cash Flow Statement because
______________is not received against the issue.     

Question: Purchase of securities by a non- finance company is ______________ 

Question: Loss on issue of debentures written off is shown by way of deduction from_________________ of thedebentures.     

Question. The basis of Cash Flow Statement is __________________  

Question: Patents purchased and completely amortized in the year of purchase is added under_____ ________andshown as an outflow under____________       

True or False :

Question: Shares issued to promoters in consideration of their services are shown as a financing activity.   

Question: Gratuity paid to a retiring employee is an Operating activity.   

Question: Buy Back of shares is an extraordinary item for Financing activity.  

Question: Issue of Bonus shares is shown as a financing activity.   

Question: Operating activities are principal revenue producing activities of an enterprise and those activities that arenot investing or financing activities.  

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