Test: Cash Flow Statement - 1 - Commerce MCQ

Rent received is classified under investing activities. It should be added while calculating cash flow from investing activities.

Computer software is an intangible asset for a company which is shown under fixed intangible assets.

While preparing companies balance sheet trade receivables are shown without deducting the provision for doubtful debts and it is shown in the liabilities side under short term provisions.

Loose tools are shown under current assets and sub heading Inventories. Loose tools are not meant for sale.

Deferred Tax liabilities are shown under Non-current Liabilities.

Refund of income tax is the part of operating activities.

Sale of machinery is concerned with investing activities. It will be added to investing activities as proceeds from sale of machinery.

Redemption of preference shares is concerned with financing activities. It will be deducted in financing activities as cash used.

Purchase of marketable securities will make no effect on cash and cash equivalents.

Reason: Cash going and marketable securities coming --- both are part of cash and cash equivalents. At the same time there is increase and decrease in cash and cash equivalents.