Cash Flow Statement Test

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Cash Flow Statement Test - 19

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Weekly Quiz Competition

Question 1
1 / -0

Net profit during the year Rs$$5,00,000$$
Depreciation in the beginning Rs$$1,50,000$$
Depreciation at the end Rs$$2,50,000$$
What is the amount of funds from operation?

A
Rs$$5,00,000$$

B
Rs$$6,00,000$$

C
Rs$$4,00,000$$

D
Rs$$1,00,000$$

Solution

Calculation 0f Amount of funds from operation =
Net Profit + Closing Depreciation - Depreciation in the beginning
= 500000 + 250000 - 150000 = 600000
Question 2
1 / -0

Provision for taxation is a part of _______________.

A
Operating activities

B
Investing activities

C
Financing activities

D
None of these
Question 3
1 / -0

Cash received from debtors _______________.

A
Sources of funds

B
Sources of cash

C
Application of funds

D
No flow of fund

Solution

When a cash payment is received from the debtor, cash is increased and the accounts receivable is decreased. When recording the transaction, cash is debited, and accounts receivable are credited.
A debtor is a person, company, or other entity that owes money. In other words, the debtor has a debt or legal obligation to pay the amount owed. So the cash received from debtors is no flow of funds.
Question 4
1 / -0

As per accounting standard $$AS-3$$, the cash flow statement is prepared with cash inflow/outflow from __________.

A
Operating activities

B
Investing activities

C
Financing activities

D
All of the above

Solution

A cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.
Question 5
1 / -0

Purchase of building by issue of debentures is a/an _____________.

A
Operating activities

B
Investing activities

C
Financing activities

D
Ignored in cash-flow statement

Solution

Any transaction that does not result in inflow or outflow of cash from the business is ignored in the cash flow statement of an entity. For example, a purchase of building by the issue of debentures, exchange of plant and machinery for replacement purposes, etc.
Question 6
1 / -0

Which of the following is not added to net profit while computing the amount of funds from operation?

A
Depreciation of machinery

B
Profit on sale of machinery

C
Good will written off

D
Loss on sale of furniture

Solution

Profit on sale of machinery is not added to net profit while computing the amount of funds from operations because it does not include income or expense via financing activities. Funds from operations do not constitute gains or losses generated from non-recurring business activities like sale of land. It includes depreciation and amortisation.
Therefore, B is the correct option.
Question 7
1 / -0

Depreciation is_______________.

A
A Cash Expenditure like other normal expenses

B
A Cash operating Expenses

C
A non-cash Non -operating Expenses

D
A Non-cash Operating Expenses

Solution

Depreciation may be described as a permanent, continuing and gradual shrinkage in the book value of fixed assets. It is based on the cost of assets consumed in a business and not on its market value.
It is a non-cash expense. It does not involve any cash outflow. It is the process of writing-off the capital expenditure already incurred.
Question 8
1 / -0

Cash from operating activities include ________________.

A
Cash from business activities

B
Sale of fixed assets

C
Borrowing from outside sources

D
Cash from business activities and changes in current assets and liabilities

Solution

Cash flow from operating activities (CFO) indicates the amount of money a company brings in from its ongoing, regular business activities, such as manufacturing and selling goods or providing a service to customers. It is the first section depicted on a company's cash flow statement. Cash flow from operating activities does not include long-term capital expenditures or investment revenue and expense. CFO focuses only on the core business, and is also known as operating cash flow (OCF) or net cash from operating activities.
Therefore, D is the correct option.

Question 9

1 / -0

A companys reported current profit Rs 70,000 after incorporating the following
Loss on sales of investment Rs 10,000.
Premium on redemption of debentures Rs 1,500.
Depreciation on Machinery and Plant Rs 20,000.
Goodwill and Preliminary Expenses written off Rs 30,000;
Gain from sale of Non-Current Assets Rs 40,000.
The net inflow of funds from the operation would be

Rs. 91,500

Rs. 80,000

Rs. 70,000

Rs.59,500

Solution

Calculation of net inflows of funds from the operation

Particular		Amount
Net Profit		70000
Loss on sales of investment	10000
Depreciation on Machinery and Plant	20000
Goodwill and Preliminary Expenses written off	30000
Premium on redemption of debentures	1500
Gain from sale of Non-Current Assets	(40000)
The net inflows for the year		91500

Question 10
1 / -0

Cash and Cash Equivalent includes _____________________.

A
Cash on hand and bank balance.

B
Marketable Securities.

C
Short-term investments.

D
All of the above.

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Cash Flow Statement Test - 19

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Cash Flow Statement Test - 19

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SHARING IS CARING

Question 1

Rs$$5,00,000$$

Rs$$6,00,000$$

Rs$$4,00,000$$

Rs$$1,00,000$$

Solution

Question 2

Operating activities

Investing activities

Financing activities

None of these

Question 3

Sources of funds

Sources of cash

Application of funds

No flow of fund

Solution

Question 4

Operating activities

Investing activities

Financing activities

All of the above

Solution

Question 5

Operating activities

Investing activities

Financing activities

Ignored in cash-flow statement

Solution

Question 6

Depreciation of machinery

Profit on sale of machinery

Good will written off

Loss on sale of furniture

Solution

Question 7

A Cash Expenditure like other normal expenses

A Cash operating Expenses

A non-cash Non -operating Expenses

A Non-cash Operating Expenses

Solution

Question 8

Cash from business activities

Sale of fixed assets

Borrowing from outside sources

Cash from business activities and changes in current assets and liabilities

Solution

Question 9

Rs. 91,500

Rs. 80,000

Rs. 70,000

Rs.59,500

Solution

Question 10

Cash on hand and bank balance.

Marketable Securities.

Short-term investments.

All of the above.

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