Cash Flow Statement MCQs:
What does the cash flow statement primarily show?
A) Revenues and Expenses
B) Financial Position
C) Cash Inflows and Outflows
D) Assets and Liabilities
Answer: C) Cash Inflows and Outflows
Which of the following is not a section of the cash flow statement?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Revenue Activities
Answer: D) Revenue Activities
Cash flows from operating activities include:
A) Sale of Equipment
B) Issuance of Bonds
C) Payment of Salaries
D) Purchase of Land
Answer: C) Payment of Salaries
Which method for calculating cash flows from operating activities starts with net income?
A) Direct Method
B) Indirect Method
C) Cash Method
D) Accrual Method
Answer: B) Indirect Method
Cash flows from investing activities include:
A) Purchase of Equipment
B) Payment of Interest
C) Issuance of Stock
D) Receipt of Dividends
Answer: A) Purchase of Equipment
Which of the following is classified as a cash inflow from financing activities?
A) Payment of Dividends
B) Repayment of Long-term Debt
C) Issuance of Common Stock
D) Purchase of Property, Plant, and Equipment
Answer: C) Issuance of Common Stock
Which section of the cash flow statement would include “Interest Paid”?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Not Included
Answer: A) Operating Activities
The direct method of cash flow reporting:
A) Starts with net income
B) Adjusts net income for changes in working capital
C) Lists all cash receipts and payments
D) Uses the indirect method’s adjustments
Answer: C) Lists all cash receipts and payments
“Purchase of Investments” is classified under which section?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: B) Investing Activities
Which of the following items is considered a cash flow from financing activities?
A) Proceeds from Issuing Bonds
B) Payments to Suppliers
C) Cash Received from Sales
D) Purchase of Equipment
Answer: A) Proceeds from Issuing Bonds
Under the indirect method, which of the following adjustments is made to net income to calculate cash flows from operating activities?
A) Add Depreciation Expense
B) Subtract Dividends Paid
C) Add Proceeds from Sale of Assets
D) Subtract Interest Paid
Answer: A) Add Depreciation Expense
Which of the following is not a cash flow from operating activities?
A) Cash Received from Customers
B) Payment of Utilities
C) Payment for Inventory
D) Proceeds from Sale of Equipment
Answer: D) Proceeds from Sale of Equipment
“Sale of Property” would be reported in which section of the cash flow statement?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Not Included
Answer: B) Investing Activities
Which cash flow statement section would include “Repayment of Short-term Debt”?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: C) Financing Activities
Under the direct method, “Cash Received from Customers” is calculated by:
A) Adding Sales Revenue to Accounts Receivable
B) Subtracting Sales Revenue from Accounts Receivable
C) Adding Beginning Accounts Receivable to Sales Revenue
D) Subtracting Ending Accounts Receivable from Sales Revenue
Answer: D) Subtracting Ending Accounts Receivable from Sales Revenue
“Payment of Dividends” is classified under which section of the cash flow statement?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: C) Financing Activities
Which of the following is a cash flow from investing activities?
A) Purchase of Inventory
B) Payment of Interest
C) Sale of Equipment
D) Payment of Wages
Answer: C) Sale of Equipment
The cash flow statement helps users assess:
A) Profitability
B) Financial Position
C) Liquidity and Financial Flexibility
D) Asset Utilization
Answer: C) Liquidity and Financial Flexibility
Under the indirect method, which adjustment is made to net income to reflect cash flows from operating activities?
A) Add Gains on Sale of Assets
B) Subtract Depreciation Expense
C) Add Losses on Sale of Assets
D) Subtract Increases in Accounts Receivable
Answer: C) Add Losses on Sale of Assets
“Proceeds from Sale of Stock” are reported in which section of the cash flow statement?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Not Included
Answer: C) Financing Activities
Which of the following is considered a non-cash activity?
A) Purchase of Equipment with Cash
B) Issuance of Debt for Equipment
C) Sale of Equipment for Cash
D) Payment of Cash Dividends
Answer: B) Issuance of Debt for Equipment
Which section of the cash flow statement includes “Cash Received from Selling Investments”?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: B) Investing Activities
“Cash Flows from Financing Activities” include:
A) Proceeds from Selling Inventory
B) Cash Payments for Interest
C) Cash Proceeds from Issuing Bonds
D) Cash Payments for Income Taxes
Answer: C) Cash Proceeds from Issuing Bonds
Under the indirect method, an increase in Accounts Receivable is:
A) Added to Net Income
B) Subtracted from Net Income
C) Included in Cash Flows from Investing Activities
D) Included in Cash Flows from Financing Activities
Answer: B) Subtracted from Net Income
Which section of the cash flow statement would include “Cash Paid for Interest”?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: A) Operating Activities
“Cash Paid for Equipment” is categorized under which section of the cash flow statement?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: B) Investing Activities
Which cash flow statement section includes “Proceeds from Long-term Debt”?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Not Included
Answer: C) Financing Activities
The cash flow statement provides information about:
A) Future Cash Flows
B) Past Cash Flows
C) Current Cash Flows
D) Projected Profits
Answer: C) Current Cash Flows
“Increase in Accounts Payable” is adjusted in which section under the indirect method?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Not Included
Answer: A) Operating Activities
“Purchase of Land” is recorded under which section of the cash flow statement?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: B) Investing Activities
Which of the following would appear in the “Cash Flows from Operating Activities” section?
A) Dividends Paid
B) Proceeds from Stock Issuance
C) Cash Receipts from Customers
D) Purchase of Investments
Answer: C) Cash Receipts from Customers
In the cash flow statement, “Depreciation Expense” is added back to:
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: A) Operating Activities
“Cash Flows from Investing Activities” include:
A) Purchase and Sale of Property
B) Borrowing and Repaying Loans
C) Payment of Dividends
D) Payment of Interest
Answer: A) Purchase and Sale of Property
Which section of the cash flow statement reflects changes in cash from core business operations?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: A) Operating Activities
“Cash Paid for Income Taxes” appears in which section of the cash flow statement?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: A) Operating Activities
“Cash Flow from Financing Activities” is calculated by:
A) Adding Cash Received from Investors and Lenders
B) Subtracting Cash Paid for Dividends and Loans
C) Adding Cash Received from Stock Issuance and Borrowing
D) Adding Cash Received from Sales and Services
Answer: C) Adding Cash Received from Stock Issuance and Borrowing
Which of the following transactions is a cash flow from investing activities?
A) Purchase of Equipment
B) Repayment of Debt
C) Issuance of Stock
D) Payment of Dividends
Answer: A) Purchase of Equipment
“Cash Flow from Investing Activities” includes:
A) Cash Receipts from Customers
B) Purchase of New Equipment
C) Payment of Salaries
D) Interest Income
Answer: B) Purchase of New Equipment
“Dividends Received” are classified under:
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: A) Operating Activities
In the cash flow statement, “Proceeds from Sale of Assets” are categorized as:
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: B) Investing Activities
Which of the following is true about the cash flow statement?
A) It shows changes in equity
B) It provides information about cash flows only from financing activities
C) It helps assess liquidity and solvency
D) It reports only cash inflows
Answer: C) It helps assess liquidity and solvency
“Interest Received” is classified as:
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: B) Investing Activities
Which of the following would appear in the “Cash Flows from Financing Activities” section?
A) Purchase of Machinery
B) Cash Payment for Taxes
C) Issuance of Bonds
D) Collection of Accounts Receivable
Answer: C) Issuance of Bonds
Under the indirect method, “Amortization of Intangible Assets” is:
A) Added to Net Income
B) Subtracted from Net Income
C) Included in Investing Activities
D) Included in Financing Activities
Answer: A) Added to Net Income
Which of the following transactions is not included in the cash flow statement?
A) Issuance of Debt
B) Purchase of Equipment
C) Depreciation Expense
D) Repayment of Loans
Answer: C) Depreciation Expense
“Cash Received from Customers” is reported in which section under the direct method?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: A) Operating Activities
Which of the following is a cash flow from financing activities?
A) Payment of Principal on Debt
B) Purchase of Equipment
C) Sale of Investments
D) Receipt of Interest
Answer: A) Payment of Principal on Debt
“Cash Paid to Suppliers” is categorized under:
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: A) Operating Activities
“Repayment of Long-term Debt” is classified under:
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: C) Financing Activities
Which section of the cash flow statement includes “Proceeds from Issuance of Shares”?
A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Non-cash Activities
Answer: C) Financing Activities