Cash Flow Statement Test

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Cash Flow Statement Test - 4

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Weekly Quiz Competition

Question 1
1 / -0

Short – term highly liquid investments which are readily convertible into known amount of cash and which are subject to an insignificant risk of change in the value are called _______.

A
Non-current Investment

B
Cash at Bank

C
Non-current Assets

D
Cash Equivalents

Solution

Short term investments which can be converted into cash in a very short period of time is treated as Cash and Cash equivalents.
Question 2
1 / -0

Cash and Cash Equivalents do not include_____.

A
Inventories

B
Cheques in hand

C
Cash at bank

D
Cash in hand

Solution

Cash and Cash Equivalents do not include inventories but following items are part of cash and cash equivalents:
•Cheques in hand
•Cash in hand
•Cash at bank

As inventories is not convertable into cash immediatly.
Question 3
1 / -0

Some type of transaction which are considered movement between cash and cash equivalents are given below except …....

A
Sale of cash equivalent securities

B
Cash withdrawn from bank.

C
Cash credit

D
Purchase of cash equivalent securities

Solution

Internal movement in cash and cash equivalents will not make any effect. Cash credit is not part of cash and cash equivalents. It is part of financing activities.
Question 4
1 / -0

Which of the following transaction is untrue regarding the limitations of cash flow statement?

A
To ascertain the net changes in cash and cash equivalents

B
It is not used for judging the profitability of enterprises

C
To help in short – term financial planning.

D
To ascertain the liquidity of enterprises

Solution

Cash Flow statement cannot help in judging the profitability of the enterprise because it just tell about the cash inflows and outflows (cash Management).
Question 5
1 / -0

Which activity is the main revenue generating activities of the enterprises?

A
Cash flow from operating activities

B
Cash flow from investment activities

C
Cash flow from management activities

D
Non Cash transactions

Solution

Operating activities are the main revenue generating activities of an enterprise. As, such, they include cash flow from those transactions and events which enter into the ascertainment of net profit or loss of the enterprise.
Question 6
1 / -0

In a statement of cash flows (indirect method) a decrease in inventory should be reported as__________.

A
A deduction

B
An addition

C
In investing activity

D
Not reported

Solution

Decrease in current assets (inventory) will be added while calculating cash flow from operating activities.
Question 7
1 / -0

When provision for depreciation account is separately maintained. In this method two accounts namely ___ and _____ account is prepared.

A
Fixed assets and provision for depreciation account

B
Investment and provision for recitation account

C
Fixed assets and Dividend account

D
Fixed assets and Investment account

Solution

When provision for depreciation a/c is maintained separately in such a case at the time of sale of asset two accounts are prepared (i) Asset Account (ii) Provision for Depreciation Account or Accumulated Depreciation Account.
Question 8
1 / -0

Operating activities is mainly concerned with_____________.

A
Current assets and current liabilities

B
Share and debentures

C
Long – term liabilities and stockholders’ equity

D
Long term assets

Solution

Operating activities is mainly concerned with current assets and current liabilities as Current means revenue/operating activities.
Question 9
1 / -0

Decrease in the value of Trade Receivable will be ……...

A
Added in operating activities

B
Deducted in operating activities

C
Deducted in Investing activities

D
Added in Investing Activities

Solution

Decrease in the value of Trade Receivables (Current assets) will be added in operating activities while preparing cash flow statement.
Question 10
1 / -0

Purchase and Sales of Shares by a manufacturing company comes under ______.

A
Operating Activities

B
Investing activities

C
Financing Activities

D
Not recorded

Solution

Purchase and Sales of Shares by a manufacturing company comes under Investing activities as investment in other's company.

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Re-Attempt Weekly Quiz Competition

Cash Flow Statement Test - 4

Result

Cash Flow Statement Test - 4

Score

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Rank

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SHARING IS CARING

Question 1

Non-current Investment

Cash at Bank

Non-current Assets

Cash Equivalents

Solution

Question 2

Inventories

Cheques in hand

Cash at bank

Cash in hand

Solution

Question 3

Sale of cash equivalent securities

Cash withdrawn from bank.

Cash credit

Purchase of cash equivalent securities

Solution

Question 4

To ascertain the net changes in cash and cash equivalents

It is not used for judging the profitability of enterprises

To help in short – term financial planning.

To ascertain the liquidity of enterprises

Solution

Question 5

Cash flow from operating activities

Cash flow from investment activities

Cash flow from management activities

Non Cash transactions

Solution

Question 6

A deduction

An addition

In investing activity

Not reported

Solution

Question 7

Fixed assets and provision for depreciation account

Investment and provision for recitation account

Fixed assets and Dividend account

Fixed assets and Investment account

Solution

Question 8

Current assets and current liabilities

Share and debentures

Long – term liabilities and stockholders’ equity

Long term assets

Solution

Question 9

Added in operating activities

Deducted in operating activities

Deducted in Investing activities

Added in Investing Activities

Solution

Question 10

Operating Activities

Investing activities

Financing Activities

Not recorded

Solution

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