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B Com Exam  >  B Com Tests  >  Cost Accounting  >  Test: Cash Flow Statements - B Com MCQ

Test: Cash Flow Statements - B Com MCQ


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10 Questions MCQ Test Cost Accounting - Test: Cash Flow Statements

Test: Cash Flow Statements for B Com 2024 is part of Cost Accounting preparation. The Test: Cash Flow Statements questions and answers have been prepared according to the B Com exam syllabus.The Test: Cash Flow Statements MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Cash Flow Statements below.
Solutions of Test: Cash Flow Statements questions in English are available as part of our Cost Accounting for B Com & Test: Cash Flow Statements solutions in Hindi for Cost Accounting course. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free. Attempt Test: Cash Flow Statements | 10 questions in 10 minutes | Mock test for B Com preparation | Free important questions MCQ to study Cost Accounting for B Com Exam | Download free PDF with solutions
Test: Cash Flow Statements - Question 1
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What is the purpose of preparing a cash flow statement?

Detailed Solution for Test: Cash Flow Statements - Question 1
The purpose of preparing a cash flow statement is to explain the sources of cash and its uses during a specific period, report the inflows and outflows of cash and its equivalents, and provide information that complements the Statement of Profit & Loss and balance sheet. It helps management understand the cash flow activities of the organization and analyze the changes in the cash balance.
Test: Cash Flow Statements - Question 2
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Which activities are classified in a cash flow statement?

Detailed Solution for Test: Cash Flow Statements - Question 2
The activities classified in a cash flow statement are operating, investing, and financing activities. Operating activities include cash receipts and payments related to the principal revenue-producing activities of the enterprise. Investing activities involve the acquisition and disposal of long-term assets and other investments. Financing activities result in changes in the size and composition of the owners' capital and borrowings of the enterprise.
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Test: Cash Flow Statements - Question 3
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What is considered as cash equivalents?

Detailed Solution for Test: Cash Flow Statements - Question 3
Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash. They are held for the purpose of meeting short-term cash commitments and are subject to an insignificant risk of changes in value. Examples of cash equivalents include treasury bills and commercial paper.
Test: Cash Flow Statements - Question 4
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What activities are classified as investing activities in a cash flow statement?
Detailed Solution for Test: Cash Flow Statements - Question 4
Investing activities in a cash flow statement include cash payments to acquire fixed assets, cash receipts from the disposal of fixed assets, cash payments to acquire shares and other investments, and cash receipts from the disposal of shares and other investments. These activities involve the acquisition and disposal of long-term assets and other investments.
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Which activities are classified as operating activities in a cash flow statement?
Detailed Solution for Test: Cash Flow Statements - Question 5
Operating activities in a cash flow statement include cash receipts from the sale of goods and services, cash receipts from royalties and other revenues, cash payments to suppliers for goods and services, cash payments to employees, and cash receipts and payments of an insurance enterprise for premiums and claims. These activities are directly related to the principal revenue-producing activities of the enterprise.
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Which activities are classified as financing activities in a cash flow statement?
Detailed Solution for Test: Cash Flow Statements - Question 6

Financing activities in a cash flow statement include cash proceeds from issuing shares or other similar instruments, cash proceeds from issuing debentures and loans, cash repayments of amounts borrowed, cash payments to redeem preference shares, and payment of dividends. These activities result in changes in the size and composition of the owners' capital and borrowings of the enterprise.

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How should cash flows in foreign currency be recorded in a cash flow statement?
Detailed Solution for Test: Cash Flow Statements - Question 7
Cash flows arising from transactions in a foreign currency should be recorded in an enterprise's reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and foreign currency at the end of the period. This ensures that the cash flows are reported at the most accurate exchange rate. Unrealized gains and losses arising from changes in foreign exchange rates are not considered as cash flows.
Test: Cash Flow Statements - Question 8
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What is the treatment of interest and dividends in a cash flow statement for financial enterprises?
Detailed Solution for Test: Cash Flow Statements - Question 8
For financial enterprises, cash flows from interest paid and interest and dividends received are classified as operating activities in a cash flow statement. This is because these cash flows are directly related to the principal revenue-producing activities of financial institutions.
Test: Cash Flow Statements - Question 9
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How are taxes on income classified in a cash flow statement?
Detailed Solution for Test: Cash Flow Statements - Question 9
Taxes on income are generally classified as cash flows from operating activities in a cash flow statement. This is because they arise from transactions that give rise to cash flows classified as operating activities. However, if it is possible to identify the tax cash flow with an individual transaction classified as investing or financing activities, it can be classified accordingly.
Test: Cash Flow Statements - Question 10
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How are acquisitions and disposals of subsidiaries and other business units classified in a cash flow statement?
Detailed Solution for Test: Cash Flow Statements - Question 10
The aggregate cash flows arising from acquisitions and disposals of subsidiaries or other business units are classified as investing activities in a cash flow statement. These transactions involve the acquisition or disposal of long-term assets and other investments. They are not directly related to the principal revenue-producing activities or changes in the size and composition of the owners' capital.
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