Cash Flow Statement

Topics in this chapter

• Cash Flow Concepts and Scope
• Cash Equivalents and AS-3 Rules
• Cash Flow Classification
• Direct Method Operating Cash Flow
• Indirect Method Operating Cash Flow
• Working Capital Adjustments
• Investing and Financing Transactions
• Non-Cash Items and Disclosure

Cheat sheet

Practice questions

1. Question 1Q-1DC099

   Which of the following transactions is classified as an Operating Activity for a manufacturing company?

   1. A.Issue of equity shares for cash
   2. B.Payment of wages to factory workers
   3. C.Purchase of machinery for cash
   4. D.Repayment of a long-term bank loan
   See the answer and solution
2. Question 2Q-75FF4F

   While preparing a Cash Flow Statement as per AS-3 (Revised), how is a cash dividend paid by a non-financial company treated?

   1. A.Operating Activity
   2. B.Investing Activity
   3. C.Financing Activity
   4. D.Cash and Cash Equivalent
   See the answer and solution
3. Question 3Q-5CE473

   An enterprise purchases machinery worth Rs 5,00,000 by issuing equity shares of the same amount. How will this transaction be recorded in the Cash Flow Statement?

   1. A.Inflow under Investing Activity and Outflow under Financing Activity
   2. B.Outflow under Investing Activity and Inflow under Financing Activity
   3. C.It will not be recorded in the Cash Flow Statement
   4. D.Outflow under Operating Activity
   See the answer and solution
4. Question 4Q-4B2E06

   Which of the following items is added back to Net Profit Before Tax and Extraordinary Items while calculating Cash Flow from Operating Activities?

   1. A.Gain on sale of machinery
   2. B.Interest income received on investments
   3. C.Depreciation on fixed assets
   4. D.Dividend received
   See the answer and solution
5. Question 5Q-D976DD

   In the context of Cash Flow Statements, how should a bank overdraft be treated?

   1. A.Operating Activity cash outflow
   2. B.Financing Activity cash flow
   3. C.Component of Cash and Cash Equivalents
   4. D.Investing Activity cash outflow
   See the answer and solution