M.C.Q (1 Marks)

MCQ 11 Mark

While calculating the cash flow statement from investment activities following items should be added except?

✓
Cash paid for purchase of Non- current Investment
B
Interest received
C
Cash received from sale of fixed assets
D
Cash received from sale of investments

Answer

Correct option: A.

Cash paid for purchase of Non- current Investment

(a) Cash paid for purchase of Non-current Investment
Explanation:
Cash paid for the purchase of investment is deducted in investing activities while preparing a cash flow statement. It showed an outflow of cash in investing activities. But Cash received from the sale of fixed assets. Cash received from the sale of investments, Interest received are inflow hence added.

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MCQ 21 Mark

If a machine whose original cost is ₹ 40,000 having accumulated depreciation ₹ 12,000, were sold for ₹ 34,000 then while preparing Cash Flow Statement its effect on cash flow will be:

✓
Cash flow from investing activities ₹ 34,000
B
Cash flow from financing activities ₹ 34,000
C
Cash flow from investing activities ₹ 6,000
D
Cash flow from financing activities ₹ 6,000

Answer

Correct option: A.

Cash flow from investing activities ₹ 34,000

(a) Cash flow from investing activities ₹ 34,000
Explanation:
Cash flow from investing activities ₹ 34,000

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MCQ 31 Mark

Which of the following is not concerned with Financing Activity?

✓
Sale of Non-current investment
B
Increase in Securities Premium
C
Loan taken from bank
D
Issue of Equity Shares

Answer

Correct option: A.

Sale of Non-current investment

(a) Sale of Non-current investment
Explanation:
Sale of investment is not concerned with financing activities in the Cash Flow statement. It is concerned with investing activities Because the sale of fixed assets is shown under Investing Activity.

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MCQ 41 Mark

A Company's Current Ratio is 2.4 : 1 and Working Capital is ₹ 5,60,000. If its Liquid Ratio is 1.5, what will be the value of Inventory?

A
₹ 6,40,000
✓
₹ 3,60,000
C
₹ 6,00,000
D
₹ 2,00,000

Answer

Correct option: B.

₹ 3,60,000

(b) ₹ 3,60,000
Explanation:
Current ratio $=\frac{C . A}{C . L}$
Current asset = 2.4 C.L
Working capital = Current Asset - Current liabilities
5,60,000 = 2.4 C.L - C.L
C.L $=\frac{5,60,000}{1.4}=$ ₹ 4,00,000
C.A = 2.4 $\times $ ₹ 4,00,000 = ₹ 9,60,000
Quick ratio $=\frac{Q . A}{C . L}$
Q.A = ₹ 4,00,000 $\times $ 1.5 = ₹ 6,00,000
Q.A = C.A - Inventory
Inventory = ₹ 9,60,000 - ₹ 6,00,000 = ₹ 3,60,000

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MCQ 51 Mark

Which of the following is not a part of Finance Cost (in Statement of Profit and Loss)?

A
Loss on Issue of Debentures
B
Interest Paid on Debentures
✓
Bank Charges
D
Interest Paid on Public Deposits

Answer

Correct option: C.

Bank Charges

(c) Bank Charges
Explanation:
Bank charges is a part of other expenses in the statement of profit and loss I statement.

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MCQ 61 Mark

Which of the following is not a limitation of financial statement analysis?

A
Qualitative aspect is ignored
✓
To assess the financial position and profitability
C
Historical analysis
D
Ignores price level changes

Answer

Correct option: B.

To assess the financial position and profitability

(b) To assess the financial position and profitability
Explanation:
Statement of profit and loss shows whether the enterprise is earning adequate profits and whether the profits have increased or decreased as compared to previous years whereas balance sheet shows the position of the business as regards to the payment of its short term as well as long term liabilities. Different ratios are also calculated. Hence, to assess the profitability and solvency is one of the objective of the financial statement analysis. Other options i.e. historical analysis, ignores price level changes, ignores qualitative aspect are the limitations of financial statement analysis.

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Accountancy M.C.Q (1 Marks)

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