Class 12 Cash Flow Statement Mock Test (CBSE)

Topics in Cash Flow Statement

• Objectives of cash flow statement
• Benefits of cash flow statement
• Cash and cash equivalents
• Cash flows
• Classification of activities for preparing cash flow statement
• Operating activities
• Investing activities
• Financing activities
• Ascertaining cash flow from operating activities: indirect method
• Ascertaining cash flow from investing and financing activities
• Preparation of cash flow statement

Cash Flow Statement practice questions with answers

1. Q1Multiple choice·1 mark
   Which of the following transactions does not result in a cash flow?

   1. (a)Issue of equity shares for cash
   2. (b)Depreciation charged on machinery
   3. (c)Payment of dividend to shareholders
   4. (d)Cash received from trade receivables
   Show answer and step marks

   1. Correct option: (b) Depreciation charged on machinery. Depreciation is a non-cash expense and does not involve any inflow or outflow of cash and cash equivalents.+1

   Answer: (b)
2. Q2Multiple choice·1 mark
   For a manufacturing enterprise, payment of dividend is classified as:

   1. (a)Cash and cash equivalents
   2. (b)Investing activity
   3. (c)Financing activity
   4. (d)Operating activity
   Show answer and step marks

   1. Correct option: (c) Financing activity. Payment of dividend by a non-financial enterprise relates to raising capital and financing the enterprise, hence it is classified as a financing activity.+1

   Answer: (c)
3. Q3Short answer·3 marks
   From the following information, calculate Cash Flow from Financing Activities: (i) Equity Share Capital increased by $Rs\ 5,00,000$ with a securities premium of $10\%$. (ii) $9\%$ Debentures of $Rs\ 2,00,000$ redeemed at a premium of $5\%$. (iii) Interest paid on $9\%$ Debentures $Rs\ 18,000$. (iv) Dividend paid on Equity Shares $Rs\ 50,000$.
   Show answer and step marks

   1. Proceeds from issue of equity shares including premium: $Rs\ 5,00,000 + Rs\ 50,000 = Rs\ 5,50,000$ (inflow).+0.5
   2. Redemption of $9\%$ debentures at a $5\%$ premium: $Rs\ 2,00,000 + Rs\ 10,000 = Rs\ 2,10,000$ (outflow).+1
   3. Interest paid on debentures $Rs\ 18,000$ (outflow).+0.5
   4. Dividend paid on equity shares $Rs\ 50,000$ (outflow).+0.5
   5. Net cash from financing activities $= Rs\ 5,50,000 - Rs\ 2,10,000 - Rs\ 18,000 - Rs\ 50,000 = Rs\ 2,72,000$.+0.5

   Answer: Net Cash from Financing Activities: Rs 2,72,000
4. Q4Short answer·3 marks
   From the following information, calculate Cash Flow from Investing Activities: (i) Machinery purchased for $Rs\ 2,00,000$. (ii) A machine costing $Rs\ 1,00,000$ (Accumulated Depreciation $Rs\ 30,000$) was sold at a gain of $Rs\ 10,000$. (iii) $10\%$ Non-Current Investments purchased for $Rs\ 1,50,000$. (iv) Interest received on investments $Rs\ 15,000$. (v) Dividend received on shares held as investments $Rs\ 12,000$.
   Show answer and step marks

   1. Sale of machine: book value $Rs\ 1,00,000 - Rs\ 30,000 = Rs\ 70,000$; sale price $= Rs\ 70,000 + Rs\ 10,000 = Rs\ 80,000$ (inflow).+0.5
   2. Purchase of machinery $Rs\ 2,00,000$ (outflow).+0.5
   3. Purchase of non-current investments $Rs\ 1,50,000$ (outflow).+0.5
   4. Interest received on investments $Rs\ 15,000$ (inflow).+0.5
   5. Dividend received $Rs\ 12,000$ (inflow).+0.5
   6. Net cash used in investing activities $= Rs\ 80,000 - Rs\ 2,00,000 - Rs\ 1,50,000 + Rs\ 15,000 + Rs\ 12,000 = Rs\ (2,43,000)$.+0.5

   Answer: Cash used in Investing Activities: Rs 2,43,000

More Class 12 Accountancy mock tests