Chapter 10: Cash Flow Statement — Online MCQ Test
ACCOUNTANCY · CLASS 12 SECOND PUC · Karnataka State Board
Practice Chapter 10: Cash Flow Statement with a free chapter-wise online MCQ test.
This chapter covers: Cash Flow Statement AS 3 Indirect Method Operating Activities Investing Activities Financing Activities Cash Inflow Cash Outflow Non Cash Transactions Net Cash Flow Working Capital.
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Chapter 10: Cash Flow Statement — Important Questions & Answers
A Cash Flow Statement shows the inflows and outflows of which item during an accounting period?
- A. Cash and cash equivalents
- B. Only cash in hand
- C. Only net profit
- D. Only working capital
Answer: A. Cash and cash equivalents
As per AS 3, a Cash Flow Statement reports changes in cash and cash equivalents during a period.
As per AS 3, a Cash Flow Statement reports changes in cash and cash equivalents during a period.
As per AS 3, cash flows are classified into how many main activities?
- A. Two
- B. Three
- C. Four
- D. Five
Answer: B. Three
Cash flows are classified into operating, investing and financing activities.
Cash flows are classified into operating, investing and financing activities.
A company has net profit before tax of ₹1,20,000, depreciation of ₹20,000, profit on sale of machinery of ₹5,000, increase in inventory of ₹10,000, decrease in debtors of ₹8,000 and increase in creditors of ₹6,000. Cash from operations before tax will be:
- A. ₹1,19,000
- B. ₹1,29,000
- C. ₹1,39,000
- D. ₹1,49,000
Answer: C. ₹1,39,000
Cash from operations = 1,20,000 + 20,000 - 5,000 - 10,000 + 8,000 + 6,000 = ₹1,39,000.
Cash from operations = 1,20,000 + 20,000 - 5,000 - 10,000 + 8,000 + 6,000 = ₹1,39,000.
Net profit before tax is ₹2,50,000. Depreciation is ₹40,000, loss on sale of furniture is ₹12,000, interest income is ₹8,000, increase in receivables is ₹30,000, decrease in inventory is ₹20,000, decrease in payables is ₹10,000 and tax paid is ₹50,000. Cash flow from operating activities is:
- A. ₹2,04,000
- B. ₹2,24,000
- C. ₹2,44,000
- D. ₹2,94,000
Answer: B. ₹2,24,000
Operating profit before working capital = 2,50,000 + 40,000 + 12,000 - 8,000 = ₹2,94,000. After working capital changes and tax: 2,94,000 - 30,000 + 20,000 - 10,000 - 50,000 = ₹2,24,000.
Operating profit before working capital = 2,50,000 + 40,000 + 12,000 - 8,000 = ₹2,94,000. After working capital changes and tax: 2,94,000 - 30,000 + 20,000 - 10,000 - 50,000 = ₹2,24,000.
Machinery at cost was ₹8,00,000 at the beginning and ₹9,50,000 at the end. Machinery costing ₹1,00,000 was sold during the year. Accumulated depreciation was ₹2,00,000 at the beginning and ₹2,40,000 at the end, and depreciation charged during the year was ₹90,000. If the machinery was sold at a loss of ₹5,000, net cash flow from machinery-related investing activity is:
- A. ₹1,55,000 outflow
- B. ₹2,05,000 outflow
- C. ₹2,50,000 outflow
- D. ₹2,95,000 outflow
Answer: B. ₹2,05,000 outflow
Purchase of machinery = 9,50,000 - 8,00,000 + 1,00,000 = ₹2,50,000. Depreciation on machinery sold = 2,00,000 + 90,000 - 2,40,000 = ₹50,000, so sale proceeds = ₹50,000 book value - ₹5,000 loss = ₹45,000; net outflow = ₹2,05,000.
Purchase of machinery = 9,50,000 - 8,00,000 + 1,00,000 = ₹2,50,000. Depreciation on machinery sold = 2,00,000 + 90,000 - 2,40,000 = ₹50,000, so sale proceeds = ₹50,000 book value - ₹5,000 loss = ₹45,000; net outflow = ₹2,05,000.