Cash Flow Analysis MCQ Quiz in मल्याळम - Objective Question with Answer for Cash Flow Analysis - സൗജന്യ PDF ഡൗൺലോഡ് ചെയ്യുക

The correct answer is All of the Above.

Key Points Cash Flow:

• According to the International Accounting Standards (IAS) 7, the cash flow associated with extraordinary items should be separately disclosed and classified as arising from operating, investing, or financing activities depending on the nature of the item.
• Extraordinary items are defined as transactions or events that are both unusual in nature and infrequent in occurrence.
• Examples of extraordinary items include gains or losses from the sale or disposal of a major business unit, restructuring charges, and write-offs of assets due to natural disasters.
• If the cash flow associated with an extraordinary item is related to the company's ongoing operations, it should be classified as an operating activity. If it is related to investing activities, such as the sale of a long-term asset, it should be classified as an investing activity.
• Finally, if it is related to financing activities, such as the issuance of debt or equity securities, it should be classified as a financing activity.
• In summary, the classification of cash flows associated with extraordinary items depends on the nature of the item and its relationship to the company's operating, investing, or financing activities.

hence, the correct answer is All of the Above.

The correct answer is Operating, financing and investing activities.

Key PointsIn Cash flow statement, cash flows are classified on the basis of operating activities, financial activities, and investing activities.

Cash Flow Statement-

• A cash flow statement is a report that shows how much cash was obtained from various sources and used to make various payments during the year.

• It is created by either doing an analysis of cash transactions or by shifting financial transactions that were created using the accrual basis to the cash basis.

Important Points In accordance with AS-3 (Revised), the cash flow statement should present operational, investing, and financing cash flows for the period.

Cash flows from Operating activities-

• The primary revenue-generating activities of the business are its operating activities, along with any other activity not related to investing or financing.
• Examples include cash payments made to suppliers of goods and services as well as cash earnings from the sale of goods and the provision of services, royalties, fees, commissions, and other forms of revenue.

Cash flows from Investing activities-

• The buying and selling of long-term assets and other investments that aren't cash equivalents are considered investing activities.
• Examples include cash payments for the purchase of fixed assets, cash proceeds from the sale of fixed assets, cash advances, and loans to third parties.

Cash flows from Financing activities-

• Activities that alter the amount and structure of the owners' capital, including preference share capital in the case of a corporation, as well as the enterprise's borrowings, are referred to as financing activities.
• Some of its examples include cash proceeds from the sale of shares or other comparable securities, cash proceeds from the sale of debentures, loans, notes, bonds, and other short- or long-term borrowings.

The correct answer is Rs. 1,00,000.

Key PointsCash Flow from Financing Activities: 

• The cash flow from financing activities (CFF) portion of a company's cash flow statement illustrates the net cash flows used to fund the business.
• Transactions involving debt, stock, and dividends are all examples of financing operations.
• Investors can see a company's financial strength and how well its capital structure is managed by looking at cash flow from financing operations.

Format of Cash Flow From Financing Activities

Important PointsCalculation of Net Cash Flow from Financing Activities

As the table shows above, the Cash flow from Financing Activities takes into account all the cash inflows and outflows of the capital-related items. When we raise capital or issue shares or take a loan it is all inflow. However, interest payment dividend payment etc are all outflows of cash.

Note: Proposed dividend for the current year is not taken into account as it has been proposed in current year but is paid in next year.

The correct answer is (A) - (II), (B) - (III), C) - (I), (D) - (IV).

Key Points

Explanation:

A. Sale of fixed asset: This is a cash inflow related to investing activities because it involves the sale of a long-term asset that is not part of the company's core operations.

B. Purchase of Goodwill: This is a cash outflow related to investing activities because it involves the acquisition of an intangible asset that contributes to the company's long-term value.

C. Tax Paid: This is a cash outflow related to operating activities because it is an expense incurred in the course of the company's core operations.

D. Dividend Paid: This is a cash outflow related to financing activities because it involves the distribution of profits to the company's shareholders, which is a financing decision.

Hence, the correct answer is (A) - (II), (B) - (III), C) - (I), (D) - (IV).

Key Points

Cash Flow Statement:

• An organization's inflows and outflows of cash and cash equivalents over a given time period are shown in a statement called a "cash flow statement."
• There are three sections in a cash flow statement: operating activities, investments, and financial activities.
• The cash flow activities known as "operating activities" are those that either produce income or keep track of the money spent on creating a good or service.
• The gains and losses resulting from investments in assets like property, plant, or equipment (PPE) are listed in the second section of the cash flow statement, which reflects the overall change in a company's cash position.
• The cash flow between the business and its owners, creditors, and other parties is tracked in the third section of the cash flow statement known as Financing Activities.

Fund Flow Statement:

• A fund flow statement compares the two balance sheets by examining the funding sources (debt and equity capital), the funding used (assets), and the reasons behind any discrepancies.
• It makes it easier for the business to track where its finances have been spent and where they have come from (long-term funds raised by issues of shares, debentures, and sales of non-current assets).

Important Points

Funds and cash flow statements are crucial management tools that provide the company with information about:

• These statements explain the causes of changes in the operating, investing, and financing activities of the organization along with the changes in the assets and liabilities between two different points of time. Such changes also have implications for the liquidity position of the company.
• It's a realistic dividend policy, as sometimes a firm has sufficient profit available for distribution as a dividend. These statements act as a guide for the future for the management.
• It helps in planning the repayment of loans, the replacement of fixed assets and other capital expenditure decisions.
• Since an organization gets to know the position of cash and the changes in its working capital, these help them with external financing as various stakeholders are interested in the investment avenues of the organization.

Thus, the correct solutions are A, B, C and D

The correct answer is Dividend received is investing activities and divided paid is financing activities.

Key Points

•  Cash flow is the movement of money in and out of a company. Cash received signifies inflows, and cash spent is outflows. The cash flow statement is a financial statement that reports a company's sources and use of cash over time.
• A cash flow statement summarizes the amount of cash and cash equivalents entering and leaving a company.
• The CFS highlights a company's cash management, including how well it generates cash. This financial statement complements the balance sheet and the income statement.

• The main components of the CFS are cash from three areas: Operating activities, investing activities, and financing activities. 

• Operating Activities - The operating activities on the CFS include any sources and uses of cash from business activities.

• Investing Activities - Investing activities include any sources and uses of cash from a company’s investments.

• Financing Activities - Cash from financing activities includes the sources of cash from investors and banks, as well as the way cash is paid to shareholders.

Additional Information

• The cash flow statement paints a picture as to how a company’s operations are running, where its money comes from, and how money is being spent.
• Also known as the statement of cash flows, the CFS helps its creditors determine how much cash is available (referred to as liquidity) for the company to fund its operating expenses and pay down its debts.

• The CFS is equally important to investors because it tells them whether a company is on solid financial ground.

Thus, the correct answer is Dividend received is investing activities and divided paid is financing activities.

The correct answer is (a), (c) and (d) only

Key Points

•  Cash flow statement: An organization's cash flow can be monitored by using a cash flow statement, which is a crucial tool for managing finances.
• The cash flow statement allows to maintain the tracking of incoming (inflow) and outgoing (outflow) cash by displaying the source of that money.
• Cash flow statement helps in maintaining optimum cash balance in the organization.
• There are three types of activities involve in cash flow statement, namely:
  • Operating Activities
  • Investment Activities
  • Financing Activities

Important Points

•  Operating Activities: The cash flow activities known as "operating activities" are those that either generate cash or keep track of the funds used to produce a good or service.
  • It includes tax payment, advertisement expense, inventory transactions, wages etc.
• Investment Activities: The gains and losses from investments in assets like property, plant or equipment (Purchase of furniture, building etc.) are recorded in this section of the cash flow statement, that shows the overall shift in a company's cash position.
• Financing Activities: The cash flow between the business and its shareholders and creditors appears in this area of the cash flow statement.
  • It includes transactions like equity, debt, dividend etc.
• So, Cash Flow Analysis is an important financial tool for the management. Its main advantages are:
  • It ​ helps in cash management
  • It helps in internal financial management
  • It discloses the movements of cash
  • It helps in Capital budgeting decisions​

​Hence, the correct answer is (a), (c) and (d) only

The correct answer is Depreciation.

Key PointsThe correct answer is depreciation because while preparing cash flow statement from indirect method all non cash expenses or non-operating expenses are added back to Net Profit before tax.

Depreciation is a Non-Cash expenses that is why it is added back to Net Profit before tax.

Important Points

The correct answer is None of the above

Key Points

 Cash Flow Statement: 

• A cash flow statement (CFS) is a financial statement that shows how much cash and cash equivalents are coming in and going out of a business.
• The CFS assesses a company's ability to manage its cash position, or how successfully it generates cash.
• The CFS is a useful addition to the balance sheet and income statement.
• Cash is the most important component of the CFS, and it comes from three sources: operating, investing, and financing activities

Important Points Issue of debentures for consideration other than cash

• This transaction will not be recorded in Cash flow statement as this will not result in Inflow or outflow of cash.
• Issue of debentures is made for consideration other than cash, the cash flow will not be affected since no cash is involved in this transaction

The correct answer is Cash used in investing activities ₹3,60,000

Key Points

Cash Flow Statement:

• A cash flow statement depicts the inflow and outflow of cash and cash equivalents from a company's various activities over a given time period.
• The main goal of a cash flow statement is to provide meaningful information about an enterprise's cash flows (inflows and outflows) over time
• It describes the reasons for cash transactions and payments, as well as changes in cash balances, during the course of an accounting year.
• Cash Flow Statement describes cash inflow and outflow under three main headings:
  • Operating Activities
  • Financing Activities
  • Investing Activities

Important Points Paid ₹4,00,000 to acquire shares in Ranbir limited

• Since, this transaction is made by a non trading company, acquisition of shares will be considered as Cash outflow from investing activities.

It receives ₹40,000 as dividend after acquisition

• It will result in inflow of cash and since the company is non-trading, dividend received will be treated as investing activity.

Cash Flows from Investing activities