Explore topic-wise MCQs in Testing Subject.

This section includes 657 Mcqs, each offering curated multiple-choice questions to sharpen your Testing Subject knowledge and support exam preparation. Choose a topic below to get started.

1.

Funds flow statement is a substitute for…

A. income statement
B. balance sheet
C. both
D. none
Answer» E.
Discussion
2.

The sources of side of funds flow statement shows the______ sources of funds of a firm.

A. internal
B. external
C. both
D. none
Answer» D. none
Discussion
3.

Basically, the funds flow statement shows the causes for changes of _________ during a period.

A. assets
B. liabilities
C. both
D. none
Answer» D. none
Discussion
4.

Which of following are original statements?

A. funds flow statement
B. financial statement
C. cash flow statement
D. working capital statement
Answer» C. cash flow statement
Discussion
5.

Who uses the funds flow statement widely?

A. financial institutions
B. financial managers
C. analysts
D. all of the above
Answer» E.
Discussion
6.

Basically, the funds flow statement is considered a tool for…

A. cost control
B. financial analysis
C. performance analysis
D. none
Answer» C. performance analysis
Discussion
7.

The funds flow analysis is of primary importance to…

A. personnel management
B. financial management
C. quality control management
D. auditing
Answer» C. quality control management
Discussion
8.

The term non-current account refers to…

A. capital
B. liabilities
C. long term liabilities
D. both (a) & (c)
Answer» E.
Discussion
9.

Share premium, share forfeited, profit and loss account, balance of profit are the examples of…

A. current assets
B. permanent liabilities
C. fixed assets
D. current liabilities
Answer» C. fixed assets
Discussion
10.

The term current account refers to….

A. current assets
B. current liabilities
C. both
D. none
Answer» D. none
Discussion
11.

Transaction between_________ may cause the flow of funds.

A. current assets and fixed assets
B. current assets and long term liabilities, and capital
C. current liabilities and fixed assets
D. all of the above
Answer» E.
Discussion
12.

The term flow of funds refers to…

A. change in funds
B. change in working capital
C. both
D. none
Answer» D. none
Discussion
13.

Which of the following is the component of current assets?

A. stock
B. prepaid expenses
C. income earned but not received
D. all of the above
Answer» E.
Discussion
14.

Funds means…

A. money
B. cash
C. machinery
D. any form of financial resources
Answer» E.
Discussion
15.

Fund flow statement is based on the concept of…

A. business entity
B. accounting period
C. going concern
D. all of the above
Answer» D. all of the above
Discussion
16.

The statement which shows the periodical increase or decrease of funds is called___________ statement.

A. funds flow
B. cash flow
C. income
D. working capital
Answer» B. cash flow
Discussion
17.

Income statement of a business shows…

A. net profit
B. net operating result of specified period
C. net loss
D. none of these
Answer» C. net loss
Discussion
18.

State whether cash deposited in bank will be classified under which kind of activity?

A. cash flow from operating activities
B. cash flow from investing activities
C. cash flow from financing activities
D. no cash flow
Answer» E.
Discussion
19.

A company has to prepare its balance sheet once in..

A. six months
B. two years
C. a year
D. as and when it needs
Answer» D. as and when it needs
Discussion
20.

How will you treat payment of ‘Interest on Debentures’ while preparing a Cash Flow Statement?

A. cash flow from operating activities
B. cash flow from investing activities
C. cash flow from financing activities
D. cash equivalent
Answer» D. cash equivalent
Discussion
21.

Where will you show purchase of Goodwill in a Cash Flow Statement?

A. cash flow from operating activities
B. cash flow from investing activities
C. cash flow from financing activities
D. cash equivalent
Answer» C. cash flow from financing activities
Discussion
22.

How will you treat Bank Overdraft in a Cash Flow Statement?

A. cash flow from operating activities ’
B. cash flow from investing activities
C. cash flow from financing activities
D. cash equivalent
Answer» D. cash equivalent
Discussion
23.

A Ltd., engaged in the business of retailing of two wheelers, invested ₹50,00,000 in the shares of a manufacturing company. Dividend received on this investment will be :

A. cash flow from operating activities
B. cash flow from investing activities
C. cash flow from financing activities
D. cash equivalent
Answer» C. cash flow from financing activities
Discussion
24.

How will you deal increase in the balance of ‘Securities Premium Reserve’ while preparing a Cash Flow Statement?

A. cash flow from operating activities
B. cash flow from investing activities
C. cash flow from financing activities
D. cash equivalent
Answer» D. cash equivalent
Discussion
25.

If 6% Pref. share capital ₹2,00,000 were redeemed at a premium of 5%, while preparing Cash Flow Statement its effect on cash flow will be :

A. cash used from financing activities ₹2,12,000
B. cash received from financing activities ₹2,12,000
C. cash used (payment) from financial activities ₹2,10,000
D. cash used (payment) from financial activities ₹2,00,000
Answer» D. cash used (payment) from financial activities ₹2,00,000
Discussion
26.

If the amount of goodwill is ₹40,000 at the beginning of a year and ₹48,000 at the end of that year then while preparing cash flow statement its effect on cash flow will be :

A. cash used (payment) in investing activities ₹8,000
B. cash received from operating activities ₹8,000
C. cash used (payment) from operating activities ₹8,000
D. cash used (payment) from financial activities ₹8,000
Answer» B. cash received from operating activities ₹8,000
Discussion
27.

Which of the following is not application of cash?

A. increase in debtors
B. increase in inventory
C. increase in bills payable
D. increase in prepaid expenses
Answer» D. increase in prepaid expenses
Discussion
28.

Which of the following is not source of cash?

A. issue of shares
B. purchase of machinery
C. sale of asset
D. dividend received
Answer» C. sale of asset
Discussion
29.

Which of the following is source of cash?

A. cash deposited into bank
B. cash withdrawn from bank
C. sale of goods costing ₹10,000 for ₹8,000
D. sale of marketable securities for cash
Answer» D. sale of marketable securities for cash
Discussion
30.

Cash flow statement is prepared for financial planning of

A. long range
B. medium range
C. short range
D. very long range
Answer» D. very long range
Discussion
31.

Which of the following is not a cash outflow?

A. increase in prepaid expenses
B. increase in debtors
C. increase in stock
D. increase in creditors
Answer» E.
Discussion
32.

Which of the following statements are false?

A. old furniture written off doesn’t affect cash flow.
B. cash flow statement is a substitute for cash account.
C. appropriation of retained earnings is not shown in cash flow statement.
D. net cash flow during a period can never be negative.
Answer» C. appropriation of retained earnings is not shown in cash flow statement.
Discussion
33.

When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________.

A. operating activities, financing activities
B. financing activities, investing activities
C. investing activities, operating activities
D. none of the above
Answer» C. investing activities, operating activities
Discussion
34.

In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____.

A. operating activities, financing activities
B. financing activities, investing activities
C. investing activities, operating activities
D. none of the above
Answer» C. investing activities, operating activities
Discussion
35.

Cash Flow Statement is based upon

A. cash basis of accounting
B. accrual basis of accounting
C. credit basis of accounting
D. none of the above
Answer» B. accrual basis of accounting
Discussion
36.

Cash Flow Statement is also known as

A. statement of changes in financial position on cash basis
B. statement accounting for variation in cash
C. both a and b
D. none of the above.
Answer» D. none of the above.
Discussion
37.

As per Accounting Standard-3, Cash Flow is classified into

A. operating activities and investing activities
B. investing activities and financing activities
C. operating activities and financing activities
D. operating activities, financing activities and investing activities
Answer» E.
Discussion
38.

Which item comes under financial activities in cash flow?

A. redemption of preference share
B. issue of preference share
C. interest paid
D. all the above
Answer» E.
Discussion
39.

The objectives of Cash Flow Statement are

A. analysis of cash position
B. short-term cash planning
C. evaluation of liquidity
D. comparison of operating performance
Answer» E.
Discussion
40.

Cash flow example from an operating activity is

A. purchase of own debenture
B. sale of fixed assets
C. interest paid on term-deposits by a bank
D. issue of equity share capital
Answer» D. issue of equity share capital
Discussion
41.

Cash flow example from an investing activity is

A. issue of debenture
B. repayment of long-term loan
C. purchase of raw materials for cash
D. sale of investment by non-financial enterprise
Answer» E.
Discussion
42.

Cash flow example from a financing activity is

A. payment of dividends
B. receipt of dividend on investment
C. cash received from customers
D. purchase of fixed asset
Answer» B. receipt of dividend on investment
Discussion
43.

The basic financial statements include

A. statement of cash flows
B. income statement
C. balance sheet
D. all of the above
Answer» E.
Discussion
44.

The purchase value of assets over its serviceable life is categorised as

A. appreciated liabilities
B. appreciated assets
C. depreciation
D. appreciation
Answer» D. appreciation
Discussion
45.

A firm that issues stocks and bonds to raise funds results in

A. decreases cash
B. increases cash
C. increases equity
D. indian overseas bank
Answer» C. increases equity
Discussion
46.

In cash flows, when a firm invests in fixed assets and short-term financial investments results in

A. increased equity
B. increased liabilities
C. decreased cash
D. increased cash
Answer» D. increased cash
Discussion
47.

Statement of cash flows includes

A. financing activities
B. operating activities
C. investing activities
D. all of the above
Answer» E.
Discussion
48.

Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock.

A. rs 54,000
B. rs 60,000
C. rs 1, 62,000
D. none of the above
Answer» B. rs 60,000
Discussion
49.

Which of the following statements are true?

A. debt to equity and debt to asset ratios measure capital structure and vary widely among industries.
B. debt utilization ratios alone do not measure a firm\s ability to meet its cash obligations.
C. dupont analysis considers the impact of debt on the profitability of the firm.
D. two of the above are true.
Answer» E.
Discussion
50.

The ________ ratios help determines the degree of financial risk and earnings volatility present in a firm.

A. profitability
B. asset utilization
C. liquidity
D. none of the above.
Answer» E.
Discussion