A cash flow statement is a financial statement that presents total data concerning complete cash inflows a business gains from its continuing progress and external financing sources, as well as all cash outflows that pay for trading activities and finances during a delivered time.
In other words, a cash flow statement is a financial statement that estimates the cash produced or used by a firm in a presented time.
Financial Statements includes, (1) Profit and Loss Account, (2) Balance sheet, (3) Cash Flow statement and (4) Notes to Accounts.
Given below are important MCQs on Cash Flow Statement to analyse your understanding of the topic. The answers are also given for your reference.
Cash Flow Statement MCQs:
1. Statement of cash flows includes
A) Financing Activities
B) Operating Activities
C) Investing Activities
D) All of the Above
Answer: D
2. In cash flows, when a company invests in fixed assets and short-term financial investments results in
A) Increased Equity
B) Increased Liabilities
C) Decreased Cash
D) Increased Cash
Answer: C
3. A company that issues stocks and bonds to raise funds results in
A) Decrease in Cash
B) Increase in Cash
C) Increase in Equity
D) Increase in Liabilities
Answer: B
4. The purchase value of assets over its serviceable life is categorised as
A) Appreciated Liabilities
B) Appreciated Assets
C) Depreciation
D) Appreciation
Answer: C
5. The basic financial statements include
A) Statement of Cash Flows
B) Statement of Retained Earnings
C) Balance Sheet and Income Statement
D) All of the Above
Answer: D
6. The statement of cash flow clarifies cash flows according to
A) Operating and Non-operating Flows
B) Inflow and Outflow
C) Investing and Non-operating Flows
D) Operating, Investing, and Financing Activities
Answer: D
7. Cash flow example from a financing activity is
A) Payment of Dividends
B) Receipt of Dividend on Investment
C) Cash Received from Customers
D) Purchase of Fixed Asset
Answer: A
8. Cash flow example from an investing activity is
A) Issue of Debenture
B) Repayment of Long-term Loan
C) Purchase of Raw Materials for Cash
D) Sale of Investment by Non-Financial Enterprise
Answer: D
9. Cash flow example from an operating activity is
A) Purchase of Own Debenture
B) Sale of Fixed Assets
C) Interest Paid on Term-deposits by a Bank
D) Issue of Equity Share Capital
Answer: C
10. Which item comes under financial activities in cash flow?
A) Redemption of Preference Share
B) Issue of Preference Share
C) Interest Paid
D) All the above
Answer: D
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