MCQ on Cash Flow Statement

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.

To put it 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.

Given below are important MCQs on Cash Flow Statement to analyze 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 firm 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 firm that issues stocks and bonds to raise funds results in

A) Decreases Cash

B) Increases Cash

C) Increases Equity

D) Increases 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) None 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 financial activity is

A) Payment of Dividend

B) Receipt of Dividend on Investment

C) Cash Received from Customers

D) Purchase of Fixed Asset

Answer: D

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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