Cash Flow Statement Test

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Cash Flow Statement Test - 1

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following is not concerned with Financing Activity?

A
Loan taken from bank

B
Sale of Non-current investment

C
Increase in Securities Premium

D
Issue of Equity Shares

Solution

Sale of investment is not concerned with financing activities in Cash Flow statement. It is concerned with investing activities.
Question 2
1 / -0

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

A
To help in short – term financial planning.

B
To ascertain the liquidity of enterprises

C
To ascertain the net changes in cash and cash equivalents

D
It is not used for judging the profitability of enterprises

Solution

Cash Flow statement cannot help in judging the profitability of the enterprise because it just tells about the cash inflows and outflows (cashManagement).
Question 3
1 / -0

Cash flow arises when the net effect of a transaction _____ the amount of cash or cash equivalents.

A
Only Increase

B
Only decrease

C
Either increase or decrease

D
None of these

Solution

Cash flow arises when the net effect of a transaction will increase or decrease the amount of cash or cash equivalents. As Cash has been changed.
Question 4
1 / -0

Operating activities is mainly concerned with_____________.

A
Long term assets

B
Current assets and current liabilities

C
Long – term liabilities and stockholders’ equity

D
Share and debentures

Solution

Operating activities is mainly concerned with current assets and current liabilities as Current means revenue/operating activities.
Question 5
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Proposed Dividend is classified under:

A
Non – current Liabilities

B
Reserves and Surplus

C
Long term provisions

D
Short term borrowings

Solution

Proposed dividend is classified under short term borrowings in the Balance Sheet of a company.
Question 6
1 / -0

Cash and Cash Equivalents do not include_____.

A
Cheques in hand

B
Inventories

C
Cash in hand

D
Cash at bank

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 7
1 / -0

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

A
Investing activities

B
Financing Activities

C
Operating Activities

D
Not recorded

Solution

Purchase and Sales of Shares by a manufacturing company comes under Investing activities as investment in other's company.
Question 8
1 / -0

For purpose of preparing cash flow statement , which of the following is not considered as a ‘cash equivalent’?

A
Commercial paper

B
An investment in Bonds

C
Marketable securities

D
Treasury Bills

Solution

An investment in bond is part of investing activities as it is a long,term investment and not linked with cash equivalents.
Question 9
1 / -0

Repayment of long term loans _________.

A
Operating Activities

B
Investing Activities

C
Both Investing Activities and Operating Activities

D
Financing Activities

Solution

Re-payment of long term loans is concerned with financing activities. Cash is going out in the form of repayment of long term loans.
Question 10
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 Equivalents

C
Cash at Bank

D
Non-current Assets

Solution

Short term investments which can be converted into cash in a very short period of time is treated as Cash and Cash equivalents.

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Re-Attempt Weekly Quiz Competition

Cash Flow Statement Test - 1

Result

Cash Flow Statement Test - 1

Score

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Rank

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SHARING IS CARING

Question 1

Loan taken from bank

Sale of Non-current investment

Increase in Securities Premium

Issue of Equity Shares

Solution

Question 2

To help in short – term financial planning.

To ascertain the liquidity of enterprises

To ascertain the net changes in cash and cash equivalents

It is not used for judging the profitability of enterprises

Solution

Question 3

Only Increase

Only decrease

Either increase or decrease

None of these

Solution

Question 4

Long term assets

Current assets and current liabilities

Long – term liabilities and stockholders’ equity

Share and debentures

Solution

Question 5

Non – current Liabilities

Reserves and Surplus

Long term provisions

Short term borrowings

Solution

Question 6

Cheques in hand

Inventories

Cash in hand

Cash at bank

Solution

Question 7

Investing activities

Financing Activities

Operating Activities

Not recorded

Solution

Question 8

Commercial paper

An investment in Bonds

Marketable securities

Treasury Bills

Solution

Question 9

Operating Activities

Investing Activities

Both Investing Activities and Operating Activities

Financing Activities

Solution

Question 10

Non-current Investment

Cash Equivalents

Cash at Bank

Non-current Assets

Solution

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