Cash flow statement class 12
- 2. 21.While preparing cash flow statement which type of activity is, ‘payment of cash to acquire debenture by an investment company’? Delhi 2012) Ans. Operating activity.
- 3. 22.While preparing cash flow statement which type of activity is, ‘payment of cash to acquire shares by a trading company’? (Delhi 2012) Ans. Investing activity
- 4. 23.State with reason whether ‘deposit of cash into bank’ will result into, inflow,outflow or no flow of cash. (Delhi 2011; hots) Ans. ‘Deposit of cash into bank’ does not result in cash flow. It is simply a movement between two components of cash and cash equivalents.
- 5. 24.List any two investing activities which result into outflow of cash.(All India 2011; Delhi 2011 C) Ans. Two investing activities which result into outflow of cash are: (i) Building purchased. (ii) Investments purchased.
- 6. 25.’Payment of dividend’ will come under which type of activity while preparing a cash flow statement? (All India 2011; Delhi 2008) Ans. ‘Payment of dividend’ is classified as ‘financing activity’ while preparing a cash flow statement.
- 7. 26.List any two financing activities that will result into outflow of cash.(All India 2011; Delhi 2011 C) Ans. Two financing activities that result into outflow of cash are: (i) Redemption of debentures. (ii) Interest paid on debentures.
- 8. 27.Name any two financing activities that result into inflow of cash. (All India 2011) Ans.The two financing activities that result into inflow of cash are: (i) Cash proceeds from issue of shares (ii) Cash proceeds from issue of debentures
- 9. 28.Name any two investing activities that result into inflow of cash. (All India 2011) Ans.Two investing activities that result into inflow of cash are: (i) Cash proceeds from sale of building. (ii) Cash proceeds form sale of investments.
- 10. 29.State with reason whether ‘withdrawal of cash from bank’ will result into, inflow,outflow or no flow Of cash.(Foreign 2011; HOTS) Ans. ‘Withdrawal of cash from bank’ does not result in cash flow. It is simply a movement between two components of cash and cash equivalents.
- 11. 30.Under which type of activity will you classify ‘issuing 9% debentures’ while preparing cash flow statement? (Delhi 2010) Ans. Financing activity.
- 12. 31.Declaration of final dividend would result into inflow, outflow or no flow of cash.Give your answer with reason. (Delhi 2010) Ans. No flow of cash as final dividend is only declared, not yet paid.
- 13. 32.Under which type of activity will you classify ‘proceeds from sale of machinery’ while preparing cash flow statement? (Delhi 2010) Ans. Investing activity.
- 14. 33.Interest received on debentures would result into inflow, outflow or no flow of cash.(All India 2010) Ans. Cash inflow, because cash comes in due to interest received on debentures.
- 15. 34.Give one difference between an operating activity and a financing activity. (Delhi 2010 C) Ans. Operating activity is the principal revenue producing activity of an enterprise whereas, financing activity are those activities which change the size and composition of owner’s equity and borrowings of an enterprise.
- 16. 35.Give any two transactions which result into ‘inflow of cash’. (All India2010) Ans. (i) Cash proceeds from sale of investments. (ii) Cash proceeds from issue of debentures.
- 17. 36.Give one difference between an operating activity and an investing activity.(All India 2010) Ans. Operating activity is the principal revenue producing activity of an enterprise whereas, investing activity includes the acquisition and disposal of fixed assets.
- 18. 37.Give one transaction which may result into outflow of cash and one which may result into no flow of cash. (All India 2010) Ans. Outflow of cash Purchase of investments. No flow of cash Cash deposited into the bank.
- 19. 38.State why non-cash transactions are ignored while preparing a cash flow Statement? (Delhi; All India 2009) Ans. Non-cash transactions are ignored while preparing a cash flow statement because cash flow statement shows flow of cash and cash equivalents during a given period.
- 20. 39.When is dividend received considered as an operating activity? (Delhi 2009; All India 2009; HOTS) Ans. Dividend received is considered as an operating activity when company is a financing or investing company.
- 21. 40.State why cash flow statement is not a substitute for income statement?(Delhi 2009; All India 2009) Ans. An income statement shows both cash and non-cash items. It shows net income of the firm. Cash flow represents only net cash inflow or outflow of cash. So, cash flow statement can’t be taken as substitute for income statement.
- 22. 41.When is interest received considered as financing activity? (Delhi 2009; All India 2009) Ans. Interest received is never considered as a financing activity
- 23. 42.State with reason whether charging of depreciation on furniture will result into inflow, outflow or no flow of cash. (Delhi 2009c) Ans. There will be no flow of cash because depreciation on furniture is a non-cash expense.
- 24. 43.’Cash receipts from sale of goods by a trading company’ will come under which activity while preparing cash flow statement? (Delhi 2009c) Ans. At the time of preparing cash flow statement, ‘cash receipts from sale of goods by a trading company’ will come under operating activity because sale of goods is the main revenue producing activity for a trading company.
- 25. 44.Dividend received by a finance company will come under which activity while preparing a cash flow statement?(All India 2009; hots) Ans. ‘Dividend received by a financing company’ is classified under operating activity because dividend received is the receipt from principal revenue producing activities of the business.
- 26. 45.State whether ‘conversion of debentures into equity shares’ by a financing company will result into inflow, outflow or no flow of cash?(Delhi 2008) Ans. ‘Conversion of debentures into equity shares’ does not result in cash flow. It is simply a movement between two components of financing activities.
- 27. 46.State whether ‘the payment of cash to creditors’ will result into inflow, outflow or no flow Of cash. (All India 2008) Ans. It will result in outflow of cash.
- 28. 47.’Dividend paid by a manufacturing company’ is classified under which kind of activity while preparing a cash flow statement? (All India 2008) Ans. ‘Dividend paid by a manufacturing company’ is classified as a financing activity.
- 29. 48.State whether ‘depreciation charged by a company’ will result into inflow, outflow or no flow of cash. (All India 2008) Ans. There will be no flow of cash because depreciation is a non-cash expense.
- 30. 49.’Interest paid by an investment company’ will come under which activity while preparing a cash flow statement? (All India 2008; hots ) Ans. ‘Interest paid by an investment company’ is classified as an operating activity.
- 31. 50.State whether the ‘purchase of goods on credit’ will result into inflow, outflow or no flow Of cash. (Foreign 2008) Ans. There is no flow of cash because purchase of goods on credit will not affect cash.