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AP Intermediate 2nd Year Cash Flow Statement — practice questions — page 2

Explore 50 free Cash Flow Statement questions in AP Intermediate 2nd Year Accountancy. Open each question or exercise to read its content, reference answers and available explanation.

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Cash Flow Statement questions and exercises with answers

Showing questions 31–50 of 50.

A firm acquires machinery by issuing equity shares. How is this treated in its cash flow statement?Read the answer and worked solution →Which pair of methods may be used to report operating cash flows under AS-3?Read the answer and worked solution →The direct method discloses major classes of what?Read the answer and worked solution →Which method gives information useful for estimating future cash flows?Read the answer and worked solution →Which method do companies in practice use most for operating cash flows?Read the answer and worked solution →Depreciation is added back to net profit in the indirect method because it is what?Read the answer and worked solution →Why is finance cost added back to profit?Read the answer and worked solution →How is profit on sale of land treated in the indirect method?Read the answer and worked solution →Goodwill written off is treated how when working out operating cash flow?Read the answer and worked solution →An increase in current assets, other than cash, has what effect on operating cash flow?Read the answer and worked solution →A decrease in current liabilities has what effect on operating profit?Read the answer and worked solution →Net increase or decrease in cash and equivalents equals which sum?Read the answer and worked solution →How is closing cash obtained in a cash flow statement?Read the answer and worked solution →Previous year's proposed dividend is shown under which activity in the current year's statement?Read the answer and worked solution →Which benefit does a cash flow statement give when used with other financial statements?Read the answer and worked solution →Cash flow statements improve comparability by removing what effect?Read the answer and worked solution →Under which Companies Act 2013 section are accounting standards notified?Read the answer and worked solution →Proceeds from sale of patents are shown under which activity?Read the answer and worked solution →Interim dividend paid on equity shares falls under which activity?Read the answer and worked solution →Short-term deposits and marketable securities are examples of what?Read the answer and worked solution →

Worked practice questions

A firm acquires machinery by issuing equity shares. How is this treated in its cash flow statement?

  1. Investing outflow
  2. Financing inflow
  3. Excluded as non-cash
  4. Operating inflow
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Correct answer: C. Excluded as non-cash

No cash or cash equivalents change hands, so the transaction is left out and disclosed elsewhere.

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Which pair of methods may be used to report operating cash flows under AS-3?

  1. Fund and ratio
  2. Gross and net profit
  3. Cash and accrual
  4. Direct and indirect
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Correct answer: D. Direct and indirect

AS-3 allows operating cash flows to be reported by either the direct or the indirect method.

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The direct method discloses major classes of what?

  1. Non-cash charges only
  2. Net profit adjustments
  3. Current ratio changes
  4. Gross receipts and payments
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Correct answer: D. Gross receipts and payments

The direct method lists gross cash receipts and gross cash payments from operations.

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More Accountancy topics

Financial Accounting & DebenturesAnalysis of Financial StatementsPartnership AccountsFinancial Statements of a CompanyAccounting for Share CapitalAccounting for Partnership Firms: Retirement and Death of a PartnerAccounting for Partnership Firms: Goodwill