Cash Flow Statement & AS-3 - MCQs with answers

Cash Flow Statement & AS-3 - MCQs with answers


1. As per AS-3, Cash Flow Statement is mandatory for

A) All enterprises
B) Companies listed on a stock exchange
C) Companies with a turnover of more than Rs 50 crores

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

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ANSWER: c) Both C and B



2. Listed Enterprises need to prepare Cash Flow Statement only under indirect method.

a) True
b) False

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ANSWER: a) True



3. In the case of financial enterprises, the cash flow resulting from interest and dividend received and interest paid should be classified as cash flow from

a) Operating activities
b) Financing activities
c) Investing activities
d) None of the above

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ANSWER: a) Operating activities



4. In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____.

a) Operating activities, financing activities
b) Financing activities, investing activities
c) Investing activities, operating activities
d) None of the above

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ANSWER: b) Financing activities, investing activities



5. Issue of bonus shares and conversion of debentures into equity are shown as a footnote to the Cash Flow Statement.

a) True
b) False

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ANSWER: a) True



6. When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________.

a) Operating activities, financing activities
b) Financing activities, investing activities
c) Investing activities, operating activities
d) None of the above

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ANSWER: b) Financing activities, investing activities



7. Which of the following statements are false?

A) Old Furniture written off doesn’t affect cash flow.
B) Cash flow statement is a substitute for cash account.
C) Appropriation of retained earnings is not shown in Cash flow statement.
D) Net cash flow during a period can never be negative.

a) A, B, C
b) B, C, D
c) C, D, A
d) None of the above

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ANSWER: b) B, C, D



8. Which of the following is not a cash inflow?

a) Decrease in debtors
b) Issue of shares
c) Decrease in creditors
d) Sale of fixed assets

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ANSWER: c) Decrease in creditors



9. Which of the following is not a cash outflow?

a) Increase in Prepaid expenses
b) Increase in debtors
c) Increase in stock
d) Increase in creditors

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ANSWER: d) Increase in creditors


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