BBA II SEMESTER (FMA-II) UNIT

MCQ QUESTIONS RELATED WITH RATIO ANALYSIS

When the concept of ratio is defined in respect to the item shown in the financial statements, it is termed as

accounting ratio

financial ratio

costing ratio

none of the above

Answer» B. financial ratio

2.	The relationship between two financial variables can be expressed in:
A.	pure ratio
B.	percentage
C.	rate or time
D.	all the above
Answer» D. all the above

Stock is considered as a liquid asset as anytime it can be converted into cash immediately.

yes

only yes

none of the above

Answer» B. no

Return on properties funds is also known as.

return on net worth

return on shareholders fun

return on the shareholders’ investment

all the above

Answer» D. all the above

What will be the Gross Profit if , total sales is Rs 2,60,000,cost of net goods sold is Rs 2,00,000 & sales return is Rs10,000 ?

13 %

28%

26%

20%

Answer» D. 20%

Which of the following is not included in current assets.

debtors

stock

cash at bank

cash in hand

Answer» B. stock

7.	Liquidity ratios are expressed in
A.	pure ratio form
B.	percentage
C.	rate or time
D.	none of the above
Answer» A. pure ratio form

Working capital turnover ratio can be determined by :

( gross profit / working capital )

( cost of goods sold / net sales )

( cost of goods sold / working capital)

none of the above

Answer» A. ( gross profit / working capital )

9.	Determine Working capital turnover ratio if, Current asset is Rs 1,50,000, current liability is Rs 1,00,000 & cost of goods sold is Rs 3,00,000.
A.	5 times
B.	6 times
C.	3 times
D.	1.5 times
Answer» B. 6 times

10.

Profit for the objective of calculating a ratio may be taken as

profit before tax but after interest

profit before interest &tax

profit after interest & tax

all the above

Answer» D. all the above

11.

If sales is Rs 5,00,000 & net profit is Rs 1,20,000 Net profit ratio is

24%

41%

60%

none of the above

Answer» A. 24%

12.

General profitability ratios are based on

investment

sales

a & b

none of the above

Answer» B. sales

13.

Determine stock turnover ratio if, Opening stock is Rs 31,000 , Closing stock is Rs 29,000, Sales is Rs 3,20,000 & Gross profit ratio is 25% on sales.

31 times

11 times

8 times

32 times

Answer» C. 8 times

14.	The ratios which reveal the final result of the managerial policies and performance is .
A.	turnover ratios.
B.	profitability ratios.
C.	short term solvency ratio.
D.	long term solvency ratio.
Answer» B. profitability ratios.

15.

Return on investment is a

turnover ratios.

short term solvency ratio.

profitability ratios.

long term solvency ratio.

Answer» C. profitability ratios.

16.

Net profit ratio is a .

turnover ratio.

long term solvency ratio.

short term solvency ratio

profitability ratio.

Answer» D. profitability ratio.

17.

Stock turnover ratio is a .

turnover ratio.

profitability ratio.

short term solvency ratio.

long term solvency ratio.

Answer» A. turnover ratio.

18.

Current ratio is a

short-term solvency ratio.

long-term solvency ratio.

profitability ratio.

turnover ratio.

Answer» A. short-term solvency ratio.

19.

Proprietary ratio is a

short-term solvency ratio.

long-term solvency ratio.

profitability ratio.

turnover ratio.

Answer» B. long-term solvency ratio.

20.

Fixed assets ratio is a

short-term solvency ratio.

long-term solvency ratio.

profitability ratio.

turnover ratio.

Answer» B. long-term solvency ratio.

21.

Fixed assets turnover ratio is a

short-term solvency ratio.

long-term solvency ratio.

profitability ratio.

turnover ratio.

Answer» D. turnover ratio.

22.

The ratio which measures the profit in relation to capital employed is known as

return on investment.

gross profit ratio.

operating ratio.

operating profit ratio.

Answer» A. return on investment.

23.

Return on equity is also called

return on investment.

gross profit ratio.

return on shareholders’ funds.

return on net worth.

Answer» D. return on net worth.

24.

Preliminary expenses is an example of .

fixed assets.

current assets.

fictitious assets.

current liabilities.

Answer» C. fictitious assets.

25.

Prepaid expenses is an example of .

fixed assets.

current assets.

fictitious assets.

current liabilities.

Answer» B. current assets.

1) Determine Debtors turnover ratio if, closing debtors is Rs 40,000, Cash sales is 25% of credit sales and excess of closing debtors over opening debtors is Rs 20,000.

a. 4 times
b. 2 times
c. 6 times
d. 8 times

Answer
ANSWER: 4 times

2) The relationship between two financial variables can be expressed in:

a. Pure ratio
b. Percentage
c. Rate or time
d. Either of the above

Answer
ANSWER: Either of the above

3) Liquid assets is determined by

a. Current assets – stock - Prepaid expenses
b. Current assets + stock + prepaid expenses
c. Current assets + Prepaid expenses
d. None of the above

Answer 4) While calculating Gross Profit, if net profit is given,

a. It can be converted into gross profit by adding interest to it
b. It can be converted into Gross profit by adding indirect expenses to it
c. Both a and b
d. None of the above

Answer
ANSWER: It can be converted into gross profit by adding interest to it

ANSWER: Current assets – stock - Prepaid expenses

5) If sales is Rs 10,00,000, sales returns is Rs 50,000, Profit Before Tax is Rs 2,00,000, Income tax is 40%, Net profit ratio is

a. 12.63%
b. 20%
c. 10%
d. 50%

Answer
ANSWER: 12.63%

6) Higher the ratio, the more favorable it is, doesn’t stand true for

a. Operating ratio
b. Liquidity ratio
c. Net profit ratio
d. Stock turnover ratio

Answer
ANSWER: Operating ratio

7) Given Sales is 1,20,000 and Gross Profit is 30,000, the gross profit ratio is

a. 24%
b. 25%
c. 40%
d. 44%

Answer
ANSWER: 25%

8) If selling price is fixed 25% above the cost, the Gross Profit ratio is

a. 13%
b. 28%
c. 26%
d. 20%

Answer
ANSWER: 20%

9) Overall Profitability ratios are based on

a. Investments
b. Sales
c. Both a and b
d. None of the above

Answer
ANSWER: Investments

10) Stock is considered as a liquid asset as anytime it can be converted into cash immediately.

a. Yes
b. No

Answer

ANSWER: No

11) The ideal level of liquid ratio is

a. 3:3
b. 4:4
c. 5:5
d. All of the above

Answer
ANSWER: 3:3

12) Which of the following is not included in current assets?

a. Debtors
b. Stock
c. Cash at bank
d. Cash in hand

Answer
ANSWER: Stock

13) Determine Working capital turnover ratio if, Current assets is Rs 1,50,000, current liabilities is Rs 1,00,000 and Cost of goods sold is Rs 3,00,000.

a. 5 times
b. 6 times
c. 3 times
d. 1.5 times

Answer
ANSWER: 6 times

14) Collection of debtors

a. Decreases current ratio
b. Increases current ratio
c. Has no effect on current ratio
d. None of the above

Answer
ANSWER: Decreases current ratio

15) Determine Operating ratio, if operating expenses is Rs 60,000, Sales is Rs 9,40,000, Sales Return is Rs 40,000 and Cost of net goods sold is Rs 6,60,000.

a. 80%
b. 15%
c. 25%
d. 11%

Answer
ANSWER: 80%

16) What will be the Gross Profit if, total sales is Rs 2,60,000, cost of net goods sold is Rs 2,00,000 and sales return is Rs 10,000?

a. 13%
b. 28%
c. 26%
d. 20%

Answer
ANSWER: 20%

17) Liquidity ratios are expressed in

a. Pure ratio form
b. Percentage
c. Rate or time
d. None of the above

Answer
ANSWER: Pure ratio form

18) Return on Proprietors funds is also known as:

a. Return on net worth
b. Return on Shareholders fund
c. Return on Shareholders Investment
d. All of the above

Answer
ANSWER: All of the above

19) Determine stock turnover ratio if, Opening stock is Rs 31,000, Closing stock is Rs 29,000, Sales is Rs 3,20,000 and Gross profit ratio is 25% on sales.

a. 31 times
b. 11 times
c. 8 times
d. 32 times

Answer
ANSWER: 8 times

20) 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

ANSWER: Rs 54,000

21) The most precise test of liquidity is

a. Quick ratio
b. Current ratio
c. Absolute Liquid ratio
d. None of the above

Answer
ANSWER: Absolute Liquid ratio

22) Debt-equity ratio is a sub-part of

a. Short-term solvency ratio
b. Long-term solvency ratio
c. Debtors turnover ratio
d. None of the above

Answer
ANSWER: Long-term solvency ratio

23) Liquid ratio is also known as

a) Quick ratio
b) Acid test ratio
c) Working capital ratio
d) Stock turnover ratio

a. A and B
b. A and C
c. B and C
d. C and D

Answer
ANSWER: A and B

24) Current ratio is stated as a crude ratio because

a. It measures only the quantity of current assets
b. It measures only the quality of current assets
c. Both a and b
d. Offerings dimension

Answer
ANSWER: It measures only the quantity of current assets

25) The ideal level of current ratio is

a. 4:2
b. 2:1
c. Both a and b
d. None of the above

Answer
ANSWER: Both a and b

26) Which ratio is considered as safe margin of solvency?

a. Liquid ratio
b. Quick ratio
c. Current ratio
d. None of the above

Answer
ANSWER: Current ratio

27) Working capital turnover ratio can be determined by:

a. (Gross Profit / Working capital)
b. (Cost of goods sold / Net sales)
c. (Cost of goods sold / Working capital)
d. None of the above

Answer
ANSWER: (Cost of goods sold / Working capital)

28) Debtors Turnover ratio is also known as

A) Receivables turnover ratio
B) Debtors velocity
C) Stock velocity
D) Payable turnover ratio

a. A and B
b. A and C
c. B and C
d. C and D

Answer
ANSWER: A and B

29) Stock velocity establishes a relationship between

a. Cost of goods sold in a given period and the average amount of inventory held during that period
b. Cost of goods sold in a given period and the average amount of stock held during that period
c. Both a and b
d. None of the above

Answer
ANSWER: Both a and b

30) The lower turnover ratio highlights the under utilizations of the resources accessible at the disposal of the firm.

a. True
b. False

Answer

ANSWER: True

31) Turnover ratios are also known as

a. Activity ratios
b. Performance ratios
c. Both a and b
d. None of the above

Answer
ANSWER: Both a and b

32) While calculating Earnings per share, if both equity and preference share capitals are there, then

a. Preference share is deducted from the net profit
b. Equity share capital is deducted from the net profit
c. Both a and b
d. None of the above

Answer
ANSWER: Preference share is deducted from the net profit

33) Return on equity capital is calculated on basis of:

a. Funds of equity shareholders
b. Equity capital only
c. Either a or b
d. None of the above

Answer
ANSWER: Either a or b

34) Which of the following is expenses ratio?

A) Administrative expenses ratio
B) Selling and Distribution expenses ratio
C) Factory expenses ratio
D) Finance Expenses ratio

a. A, B and D
b. A, C and D
c. A, B and C
d. A, B, C, D

Answer
ANSWER: A, B, C, D

35) Operating ratio is calculated by

a. (Operating Cost / Gross sales) * 100
b. (Operating Cost / Gross sales) * 100
c. (Operating cost / Net sales) * 100
d. None of the above

Answer
*ANSWER: (Operating cost / Net sales) 100**

36) Net operating profit ratio determines ___________ while net profit ratio determines

a. Overall efficiency of the business, working efficiency of the management
b. Working efficiency of the management, overall efficiency of the business
c. Overall efficiency of the external market, working efficiency of the internal management
d. None of the above

Answer
ANSWER: Working efficiency of the management, overall efficiency of the business

37) If sales is Rs 5,00,000 and net profit is Rs 1,20,000 Net Profit ratio is

a. 24%
b. 416%
c. 60%
d. None of the above

Answer
ANSWER: 24%

38) Net Profit ratio is calculated by

a. (Gross Profit / Gross sales) * 100
b. (Gross Profit / Net sales) * 100
c. (Net Profit / Net sales) * 100
d. None of the above

Answer
*ANSWER: (Net Profit / Net sales) 100**

39) Gross Profit ratio should be adequate to cover

a. Selling expenses
b. Administrative expenses
c. Dividends
d. All of the above

Answer
ANSWER: All of the above

40) Gross profit ratio is calculated by

a. (Gross Profit / Gross sales) * 100
b. (Gross Profit / Net sales) * 100
c. (Net Profit / Gross sales) * 100
d. None of the above

Answer

ANSWER: (Gross Profit / Net sales) * 100

41) While calculating Gross Profit ratio,

a. Closing stock is deducted from cost of goods sold
b. Closing stock is added to cost of goods sold
c. Closing stock is ignored
d. None of the above

Answer
ANSWER: Closing stock is deducted from cost of goods sold

42) Gross Profit ratio is also termed as

a. Gross Profit Margin
b. Gross Margin to net sales
c. Both a and b
d. All of the above

Answer
ANSWER: Both a and b

43) General Profitability ratios are based on

a. Investments
b. Sales
c. Both A & B
d. None of the above

Answer
ANSWER: Sales

44) Which of the following falls under Profitability ratios?

A) General Profitability ratios
B) Overall Profitability ratios
C) Comprehensive Profitability ratios

a. A and B
b. A and C
c. B and C
d. None of the above

Answer
ANSWER: A and B

45) Which of the following are limitations of ratio analysis?

A) Ratio analysis may result in false results if variations in price levels are not considered.
B) Ratio analysis ignores qualitative factors.
C) Ratio Analysis ignores quantitative factors.
D) Ratio Analysis is historical analysis.

a. A, B and D
b. A, C and D
c. A, B and C
d. A, B, C, D

Answer
ANSWER: A, B and D

46) Profit for the objective of calculating a ratio may be taken as

a. Profit before tax but after interest
b. Profit before interest and tax
c. Profit after interest and tax
d. All of the above

Answer
ANSWER: All of the above

47) The ratio analysis is helpful to management in taking several decisions, but as a mechanical substitute for judgment and thinking, it is worse than useless.

a. True
b. False

Answer
ANSWER: True

48) Which of the following statements are true about Ratio Analysis?

A) Ratio analysis is useful in financial analysis.
B) Ratio analysis is helpful in communication and coordination.
C) Ratio Analysis is not helpful in identifying weak spots of the business.
D) Ratio Analysis is helpful in financial planning and forecasting.

a. A, B and D
b. A, C and D
c. A, B and C
d. A, B, C, D

Answer
ANSWER: A, B and D

49) The definition, “The term accounting ratio is used to describe significant relationship which exist between figures shown in a balance sheet, in a profit and loss account, in a budgetary control system or in a any part of the accounting organization” is given by

a. Biramn and Dribin
b. Lord Keynes
c. J. Betty
d. None of the above

Answer
ANSWER: J. Betty

50) When the concept of ratio is defined in respect to the items shown in the financial statements, it is termed as

a. Accounting ratio
b. Financial ratio
c. Costing ratio
d. None of the above

Answer

ANSWER: Accounting ratio

MCQ’S

1) The cash flow statement analysis is described in terms of which of the following activities?

a) Operating activities
b) Financing activities
c) Investing activities
d) All of the above

Ans: d) All of the above

Explanation:

The cash flow statement full script effect on cash of the changes in the balance sheet in terms of activities like financing, operating, and investing. Hence, options a,b and call are correct. So, the final option will be option d.

2) In the cash flow statement if the company invests more in fixed assets and short term financial investments, it would result to:

a) decreased cash
b) increased cash
c) increased equity
d) increased liability

Ans: a) decreased cash

Explanation:

The fixed assets include furniture, land machinery, and building. Investing in such fixed assets and investing in short-term financial investments leads to decreased cash.

3) Which of the following are regarded as financial activities in the cash flow?

a) The interest that is paid
b)The issue of preference share
c) The redemption of the preference share
d) All of the above

Ans: d) All of the above

Explanation:

All the financial activities which affect the balance sheet and the cash flow will be regarded as financial activities in the cash flow. Hence, all of the above options are true, so option d, all of the above.

4) An activity that falls under operating activity in the cash flow statement is:

a) The sales of the fixed asset
b) The interest that is paid on term deposits by a bank
c) The purchase of the own debenture
d) The sewing of equity share capital

Ans: b) The interest that is paid on term deposits by the bank

Explanation:

Operational activities are the activities required to carry out a company’s operations. The activities include interest paid to terms deposited by banks, the salary of the employees, etc.

5) The cash flow statement will define the cash flow concerning which of the following?

a) the operating and non-operating flows
b) The outflow and inflow
c) The investing and non-operating floors
d) The investing, operating, and financing activities

Ans: d) The investing, operating, and financial activities

Explanation:

The definition of the cash flow statement scribes the flow of cash in terms of operating activities, investing activities, and financing activities. Hence, the correct option is option d.

6) Who will be interested in the cash flow statements of a company?

a) The directors of the company
b) The shareholders of the company
c) The potential investors of the company
d) All of the above

Ans: d) All of the above

Explanation:

They will be interested in the cash flow statement to ensure the company doesn’t trade while insolvent; the potential investors and shareholders will be interested in the cash flow statement to know its financial condition. Hence, option d, all of the above is correct.

7) What does the cash flow statement intend to do?

a) The future cash flows and borrowing could be predicted
b) Different companies can be easily compared with each other
c) Provide formation regarding a company’s solvency, liquidity, and financial stability
d) All of the above

Ans: d) All of the above

Explanation:

The cash flow statement tells us many things about a company like it’s like the future cash flow. The performance of the two companies can be analysed by comparing the cash flow statements. Hence, option d.

8) The company which issues bonds and stocks to raise funds will result to:

a) Increase in cash
b) decrease in cash
c) increase in the liabilities
d) increase in the equity

Ans: a) Increase in the cash

Explanation:

When more bonds and stocks are issued, the fit gain from these activities will increase cash in the organisation. This cash can be used to carry out other activities and operations in the company.

9) The activity which is recorded as investing activity in cash flow is:

a) Sale of investment by non-financial enterprise
b) Issuing a debenture
c) Paying back a loan
d) The raw material purchased with cash

Ans: a) Sale of investment by a non-financial enterprise

Explanation:

The activities which fall under the investing activities of the cash flow statement are the collection of loans, proceeds of insurance settlements and the sale of investment instruments like bonds and stocks. Hence, option a is correct.

10) The financial statements will include which of the following entities?

a) The balance sheet and the income statement
b) The statement regarding the equity of shareholders
c) The statements of the cash flow
d) All of the above

Ans: d) All of the above

Explanation:

There are five types of financial statements, which include: the statement of change in equity, the cash flow statement, the income statement, the statement regarding equity of the cash holder and the statement of the financial position.

11) Will the purchase value of assets over IT serviceable life come under the following terms?

a) appreciated assets
b) appreciated liabilities
c) depreciation
d) appreciation

Ans: c) depreciation

Explanation:

Calculating the cost of tangible assets over their useful life is accounted for by depreciation. Hence, the purchase value of assets over their serviceable life will come under depreciation.

12) Which of the following are the objectives of the cash flow statement?

a) The cash basis of the accounting
b) The credit basis of the accounting
c) The accrual basis of the accounting
d) None of the above

Ans: a) The cash basis of the accounting

Explanation:

The cash flow statement provides data about the company’s cash flow due to ongoing operations. Its main focus is the flow of cash aspect of the accounting and not the credit or the accrual aspect.

13) What of the following statements will be considered false?

a) Cash flow statements are useful for forming policies.
b) The external analysis can be performed with a cash flow statement.
c) The cash flow can be estimated with the help of a cash flow statement.
d) None of the above

Ans: d) None of the above

Explanation:

The cash flow statement is of a lot of use. It helps estimate future cash flow, helps people outside the company for external analysis, and the directors of a company can form policies based on the cash flow statement. Hence, none of the above statements is false.

14) The cash flow statement is also called:

a) The statement for accounting for the variation in cash
b) The statement of changes in financial position based on cash
c) Both a and b
d) None of the above

Ans: c) Both a and b

Explanation:

The cash flow statement describes the variation inflow of cash and describes the change in a financial position concerning cash. Hence, option a and b are both correct.

15) The cash flow statement is prepared from which of the following?

a) By making use of the balance sheet
b) The profit and loss account is used
c) Additional information
d) All of the above

Ans: d) All of the above

Explanation:

A lot of information about cash flow is required to prepare the cash flow statement. This includes information about profit and loss accounts for the balance sheet information and extra information.

16) Which of the following must be eliminated to calculate cash flow shown in the profit and loss account converted into receipts and payments?

a) Non-cash expenses from the expenses which were incurred
b) The non-cash revenue from the revenue which is earned
c) Both a and b
d) None of the above

Ans: c) Both a and b

Explanation:

The profit and loss account contains the non-cash revenues and expenses as well. They need to be eliminated to calculate the cash flow of the operating activities shown in the profit and loss account.

17) How is the cash flow due to the sales calculated?

a) opening debtors + sales + opening B/R – closing debtors – closing B/R
b) cash collections + cash sales
c) None of a and b
d) Both a and b

Ans: d) Both a and b

Explanation:

The cash flow due to cells can be calculated by adding cash sales with cash collection. It can also be calculated by adding opening debtors and opening B/R and sales while subtracting closing debtors and closing B/R.

18) Which of the following come under investing activities in the cash flow?

a) Sale of fixed assets
b) The interest that is received
c) Dividend received
d) All of the above

Ans: d) All of the above

Explanation:

The sale of fixed assets, interest received, and the dividend received all come under the investing activities of the cash flow.Chapter: Cash Flow Statement

1.	Statement of cash flows includes
A.	financing activities
B.	operating activities
C.	investing activities
D.	all of the above
Answer» D. all of the above

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

decreases cash

increases cash

increases equity

indian overseas bank

Answer» B. increases cash

4.	The purchase value of assets over its serviceable life is categorised as
A.	appreciated liabilities
B.	appreciated assets
C.	depreciation
D.	appreciation
Answer» C. depreciation

5.	The basic financial statements include
A.	statement of cash flows
B.	income statement
C.	balance sheet
D.	all of the above
Answer» D. all of the above

Cash flow example from a financing activity is

payment of dividends

receipt of dividend on investment

cash received from customers

purchase of fixed asset

Answer» A. payment of dividends

7.	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» D. sale of investment by non-financial enterprise

8.	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» C. interest paid on term-deposits by a bank

Which item comes under financial activities in cash flow?

redemption of preference share

issue of preference share

interest paid

all the above

Answer» D. all the above

10.	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» D. operating activities, financing activities and investing activities

12.

The objectives of Cash Flow Statement are

analysis of cash position

short-term cash planning

evaluation of liquidity

comparison of operating performance

Answer» D. comparison of operating performance

13.	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» A. cash basis of accounting

14.

Which of the following statements are true?

cash flow reveals only the inflow of cash

cash flow reveals only the outflow of cash

cash flow is a substitute for income statement

cash flow statement is not a replacement of funds flow statement.

Answer» D. cash flow statement is not a replacement of funds flow statement.

15.

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 .

operating activities, financing activities

financing activities, investing activities

investing activities, operating activities

none of the above

Answer» B. financing activities, investing activities

16.

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

operating activities, financing activities

financing activities, investing activities

investing activities, operating activities

none of the above

Answer» B. financing activities, investing activities

17.

Which of the following statements are false?

old furniture written off doesn’t affect cash flow.

cash flow statement is a substitute for cash account.

appropriation of retained earnings is not shown in cash flow statement.

net cash flow during a period can never be negative.

Answer» B. cash flow statement is a substitute for cash account.

18.

Which of the following is not a cash outflow?

increase in prepaid expenses

increase in debtors

increase in stock

increase in creditors

Answer» D. increase in creditors

19.

Cash flow statement is prepared for financial planning of

long range

medium range

short range

very long range

Answer» C. short range

20.

Which of the following is source of cash?

cash deposited into bank

cash withdrawn from bank

sale of goods costing ₹10,000 for ₹8,000

sale of marketable securities for cash

Answer» C. sale of goods costing ₹10,000 for ₹8,000

21.

Which of the following is not source of cash?

issue of shares

purchase of machinery

sale of asset

dividend received

Answer» B. purchase of machinery

22.

Which of the following is not application of cash?

increase in debtors

increase in inventory

increase in bills payable

increase in prepaid expenses

Answer» C. increase in bills payable

23.	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» C. cash used (payment) from financial activities ₹2,10,000