Start learning →

ACCA Knowledge Level Statement of Cash Flows — practice questions

Explore 11 free Statement of Cash Flows questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

Practise Statement of Cash Flows with Quill →

Statement of Cash Flows questions and exercises with answers

Showing questions 1–11 of 11.

Under which section of the statement of cash flows is the purchase of equipment for cash reported?Read the answer and worked solution →A company issues common stock for cash. In which section of the statement of cash flows does this appear?Read the answer and worked solution →Which of the following is classified as a financing activity on the statement of cash flows?Read the answer and worked solution →In the statement of cash flows, a transaction in which the Cash account is credited represents what?Read the answer and worked solution →Under the indirect method, how is depreciation expense treated in the operating activities section?Read the answer and worked solution →Under the indirect method, a decrease in accounts receivable during the year is treated how?Read the answer and worked solution →Under the indirect method, a decrease in wages payable (a current liability) during the year is treated how?Read the answer and worked solution →Investments that cost $80,000 were sold at a $10,000 gain. What was the cash inflow from the sale?Read the answer and worked solution →Match the Statement (ACCA FA)Read the answer and worked solution →P&L or Position? (ACCA FA)Read the answer and worked solution →Finish the Term (ACCA FA)Read the answer and worked solution →

Worked practice questions

Under which section of the statement of cash flows is the purchase of equipment for cash reported?

  1. Stockholders' equity reconciliation
  2. Operating activities
  3. Financing activities
  4. Investing activities
Show answer and solution

Correct answer: D. Investing activities

1. Investing activities involve fixed or long-term assets expected to last more than one year. 2. Equipment is a long-term asset, so buying it is an investing activity. 3. Operating activities cover day-to-day income statement items and current assets/liabilities, not equipment. 4. Financing covers long-term debt and equity, not asset purchases. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.2.1 "Types of Business Activities", p.265_

Open this question →

A company issues common stock for cash. In which section of the statement of cash flows does this appear?

  1. Operating activities
  2. Financing activities
  3. Investing activities
  4. Current liabilities section
Show answer and solution

Correct answer: B. Financing activities

1. Financing activities involve raising funds through long-term debt or equity accounts. 2. Issuing common or preferred stock is explicitly a financing activity. 3. Investing relates to buying/selling long-term assets, not issuing the firm's own stock. 4. Operating relates to income statement items and working capital. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.2.1 "Types of Business Activities", p.265_

Open this question →

Which of the following is classified as a financing activity on the statement of cash flows?

  1. Paying cash for employee wages
  2. Collecting cash from credit customers
  3. Buying land for cash
  4. Paying cash dividends to stockholders
Show answer and solution

Correct answer: D. Paying cash dividends to stockholders

1. Financing activities relate to long-term debt and equity, including transactions with stockholders. 2. Paying dividends is related to stock and is therefore a financing activity. 3. Collecting from customers and paying wages are operating activities. 4. Buying land is an investing activity. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.2.1 "Types of Business Activities", p.265_

Open this question →

How to practise

  1. Choose a Statement of Cash Flows question and try to work out your answer.
  2. Open the question to check the correct answer and read its worked solution.
  3. Continue in the app for bite-sized lessons, explanations and review with Quill. You can start without creating an account.

More Financial Accounting topics

Ratio AnalysisThe Mechanics of the Accounting ProcessInventory ValuationAsset, Liability and Equity AccountsFinancial StatementsAccounting EquationBonds PayableThe Accounting Equation