Concepts of Cash Flow Statement - MCQs with answers

Concepts of Cash Flow Statement - MCQs with answers

1. As per Accounting Standard-3, Cash Flow is classified into

a) Operating activities and investing activities
b) Investing activities and financing activities
c) Operating activities and financing activities
d) Operating activities, financing activities and investing activities

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2. Cash Flow Statement is also known as

a) Statement of Changes in Financial Position on Cash basis
b) Statement accounting for variation in cash
c) Both a and b
d) None of the above.

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3. The objectives of Cash Flow Statement are

A) Analysis of cash position
B) Short-term cash planning
C) Evaluation of liquidity
D) Comparison of operating Performance

a) Both A and B
b) Both A and C
c) Both B and D
d) A, B, C, D

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4. In cash flow statement, the item of interest is shown in

A) Operating Activities
B) Financing Activities
C) Investing Activities

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C

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5. Cash Flow Statement is based upon

a) Cash basis of accounting
b) Accrual basis of accounting
c) Credit basis of accounting
d) None of the above

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6. Which of the following statements are false?

A) Cash Flow Statement is helpful in the formation of policies.
B) Cash Flow Statement is useful for external analysis
C) Cash Flow Statement is helpful in estimating future cash flow

a) Both A and B
b) Both A and C
c) Both B and C
d) None of the above

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7. Which of the following statements are true?

A) Cash flow reveals only the inflow of cash
B) Cash flow reveals only the outflow of cash
C) Cash flow is a substitute for income statement
D) Cash flow statement is not a replacement of funds flow statement.

a) Only A
b) Only B
c) Both B and C
d) Only D

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