Cash flow statement MCQs | Class 12 Accountancy Chapter 6 MCQ Question and Answers

Cash flow statement MCQ Question Answers suitable for CUET 2025 from Class 12 Accountancy Chapter 6

To score full marks in the CUET 2025 Accountancy exam, Practice Class 12 Accountancy Chapter 6 Cash flow statement MCQ Test any number of times free on our website. These questions have been created by our experts from the latest Class 12 Accountancy Syllabus and as per latest exam pattern. Multiple Choice Questions (MCQs) are a type of objective assessment in which a person is asked to choose one or more correct answers from a list of available options. An MCQ presents a question along with several possible answers. Most of the exams in India including the CUET exam conduct an online test to check your knowledge.

Class 12 Accountancy Chapter 6 MCQs

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1. Which of these Belongs to Operating activity?

a.Proceeds from issue of equity shares

b.Procurement of loans

c.Receipt from royalties & Purchase of inventory

d.Redemption of preference

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2. ______ are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Investing activities relate to purchase and sale of long-term assets or fixed assets such as machinery, furniture, land and building, etc

a.Operating Activities

b.Investing activities

c.Cash & Cash Equivalents

d.Financing Activities

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3. ______shows inflow and outflow of cash and cash equivalents from various activities of a company during a specific period.

a.Cash Flow Statement

b.None of the Above

c.Fund Flow Statement

d.Both A and B

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4. Cash from Operating activities will decrease due to

a.Both A and B above

b.Increase in Current Assets

c.Decrease in Current Liabilities

d.Neither of the two

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5. Against the Changes in current assets and liabilities during the period. Adjustments should be made as Increase in current assets and decrease in current liabilities are to be__________

a.Deducted

b.Ignored

c.Added Up

d.None of the Above

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6. As per AS-3, ‘Cash’ comprises of; -

a.Both a and b

b.None of the Above

c.short-term highly liquid investments

d.cash in hand and demand deposits with banks,

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7. While Preparing Cash Flow Statement, non-cash items and non-Operating items are not required to be adjusted Under_______

a.Direct Method

b.Indirect Method

c.Non cash Method

d.Residual Method

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8. If the net profits earned during the year is Rs. 50000 and Number of debtors in the beginning and the end of the year is Rs. 10000 and Rs. 20000 respectively, then the cash from operating activities will be equal to Rs. _______

a.40000

b.10000

c.60000

d.50000

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9. Where Purchase of goodwill in Cash Flow Statement Will appear Under?

a.Cash flow from Investing Activities

b.Cash flow from Financing Activities

c.Cash flow from Operating Activities

d.Cash & cash Equivalent

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10. Which of the Transaction will not be regarded as cash flow?

a.Cash Deposited in Bank Account

b.Issue of Equity Shares

c.Redemption of Preference Shares

d.Sale of Plant and Machinery

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11. Capital gains tax paid on sale of fixed assets should be classified under_________.

a.Cash & Cash Equivalents

b.Financing Activities

c.Operating Activities

d.investing activities

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12. Which of the following will come under operating activity?

a.Trading commission received by a manufacturing company

b.Issue of shares for cash

c.Interest received on short-term investments

d.Sale of marketable securities

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13. As per AS-4, Contingencies and Events Occurring after the Balance Sheet Date, Proposed dividend is shown in the Notes to Accounts. It will be shown as contingent liability since it becomes a liability after it is declared (approved) by the shareholders

a.Contingent Liability

b.Balance Sheet Asset

c.Current Liabilities

d.Reserves and Surplus

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14. _______are non-recurring in nature and hence cash flows associated with extraordinary items should be classified and disclosed separately as arising from operating, investing or financing activities

a.Dividends

b.Taxes

c.Non-Extraordinary items

d.Extraordinary Items

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15. From the following information Find the cash Flow. Operating Profit before working capital changes -Rs.100000, Depreciation on fixed assets- Rs.15000, Loss on sale of Furniture- Rs. 5000, Interest paid- Rs. 13000, Increase in debtors – Rs. 8000 Decrease in stock-Rs. 7000 Increase in creditors -Rs. 4000

a.Rs 103000

b.Rs 118000

c.Rs 124000

d.Rs 100000

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16. As Per Cash Flow Statement, when a firm invests in fixed assets and short-term financial investments results into

a.Deceased Cash Inflow

b.Increased Cash Inflow

c.Deceased Cash Outflow

d.Increased Cash Outflow

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17. Which Statement is Incorrect Regarding Cash Flow Statement?

a.It also helps in balancing its cash inflow and cash outflow, keeping in response to changing condition

b.It also enhances the comparability of the reporting of operating performance

c.A cash flow statement when used along with other financial statements provides information

d.The primary objective of CFS is to provide useful information Importantly of Cash Inflows Instead of cash flows

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18. Which is incorrect Cash Flow Under Financing Activities

a.Cash purchase of Machinery and Plant

b.Dividends paid on equity and preference capital

c.Interest paid on debentures and long-term loans and advances.

d.Cash repayments of amounts borrowed

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19. Declaration Of Dividend of Previous Year will be Classified as

a.None of the Above

b.Cash flow from Investing Activities in Current Year

c.Cash flow from Financing Activities in Previous Year

d.Cash flow from Operating Activities in Current Year

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20. A company receives a dividend of Rs.2 Lakhs on its investment in other company’s shares. In case If its a Finance Company, it will be classified under which kind of activity?

a.Cash flow from Investing Activities

b.Cash & cash Equivalents

c.Cash flow from Financing Activities

d.Cash flow from Operating Activities

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To summarize, revising for free using our MCQs on Class 12 Accountancy Chapter 6 Cash flow statement is highly beneficial for scoring full marks on the CUET 2025 Accountancy exam. We provide a sophisticated online test platform tailored for unlimited practice through proficiently crafted questions built on the most recent syllabus and exam pattern. Practicing MCQs regularly will boost conceptual understanding as they are significant for objective assessments. Start practicing now to succeed in your CUET 2025 Accountancy exam!

Also See : 

Class 12 Accountancy Part 1

Accounting for share capital MCQs Class 12 Accountancy Chapter 1 (Part 1)

Accounting for partnership: basic concepts MCQs Class 12 Accountancy Chapter 2 (Part 1)

Financial statements of a company MCQs Class 12 Accountancy Chapter 3 (Part 1)

Analysis of financial statements MCQs Class 12 Accountancy Chapter 4 (Part 1)

Accounting ratios MCQs Class 12 Accountancy Chapter 5 (Part 1)

Class 12 Accountancy Part 2

Accounting for not for profit organisation MCQs Class 12 Accountancy Chapter 1 (Part 2)

Issue and redemption of debentures MCQs Class 12 Accountancy Chapter 2 (Part 2)

Reconstitution of a partnership firm – admission of a partner MCQs Class 12 Accountancy Chapter 3 (Part 2)

Retirement/death of a partner MCQs Class 12 Accountancy Chapter 4 (Part 2)

Dissolution of partnership firm MCQs Class 12 Accountancy Chapter 5 (Part 2)