Lakshya Education MCQs

Question: The statement of cash flows clarifies cash flows according to :
Options:
A.Operating and non-operating flows
B.Investing and Non-operating flows
C.Inflows and outflows
D.Operating, investing and financing activities
Answer: Option D
: D

The statement of cash flows clarifies cash flows according to operating, investing and financing activities.

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More Questions on This Topic :

Question 1. Cash flow from operating activities excludes money that is spent on capital expenditures. True or False
  1.    True
  2.    False
  3.    A cash outflow for purchase of fixed asset
  4.    A cash outflow to purchase bonds issued by another company
Answer: Option A
: A

True.Cash flow from operating activities excludes money that is spent on capital expenditures.
Question 2. Example of cash flow from financing activity is :
  1.    Payment of dividend
  2.    Receipt of dividend on investment
  3.    Cash received from customer
  4.    Purchase of fixed Asset
Answer: Option A
: A

Example of cash flow from financing activity is payment of dividend
Question 3. Non-cash expenses like depreciation, depletion & amortization expense are _______ to net profit before tax under indirect method.
  1.    Not treated
  2.    Added
  3.    Subtracted
  4.    None of these
Answer: Option B
: B

Non-cash expenses like depreciation, depletion & amortization expense are added to net profit before tax under indirect method.
Question 4. A company sells old plant for Rs. 12,000 cash. The book value of the plant is Rs. 7,000. This transaction would affect:
  1.    Investing activities
  2.    Financing activities
  3.    Both investing and financing activities
  4.    None of these
Answer: Option A
: A

This transaction would affect investing activitiessince it is related to fixed assets
Question 5. When a fixed asset is bought as hire purchase, interest element is classified under ___.
  1.    Operating activities
  2.    Investing activities
  3.    Financing activities
  4.    None of these
Answer: Option C
: C

When a fixed asset is bought as hire purchase, interest element is classified under financing activities.

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