Gujarat Board GSEB Class 12 Commerce Accounts Important Questions Part 2 Chapter 6 Cash Flow Statement Important Questions and Answers.

GSEB Class 12 Accounts Important Questions Part 2 Chapter 6 Cash Flow Statement

Answer the following question in one sentence only.

Question 1.
What is meant by cash inflow?
Answer:
A transaction due to which cash or cash equivalent increases is known as cash inflow.

Question 2.
What is meant by cash outflow?
Answer:
A transaction due to which cash or cash equivalent decreases is known as cash outflow.

Question 3.
What is net cash flow?
Answer:
The difference between cash inflow and cash outflow is known as net cash flow.

Question 4.
Which three activities are shown in the cash flow statement?
Answer:
Following three activities are shown in the cash flow statement :

• Operating activities
• Investing activities
• Financing activities.

Question 5.
Which type of cash flow arising from cash flow activities?
Answer:
Cash flow arising from cash flow activities can be positive or negative.

Question 6.
How can we identify the operating activities?
Answer:
The identification of operating activities of each business is based on the nature of business.

Question 7.
For trading company which are the main activities of income generation ?
Answer:
For trading company, the activities of purchase-sales of goods are main activities of income generation.

Question 8.
Amount received from debtors is a which kind of activity? Why?
Answer:
Amount received from debtors is a operating activity. Debtors arising from sales. Sales is a operating activity.

Question 9.
What is meant by cash flow from operating activities?
Answer:
The cash flow from operating activities means the cash flow generated from the day to day transactions of a business entity.

Question 10.
Which are the two types of non-cash transaction?
Answer:
Two types of Non-cash transactions:

1. Operating transaction
2. Non-operating transaction.

Question 11.
What are the financial expenses?
Answer:
Amounts which are paid as a return of capital are known as financial expenses.

Question 12.
Which kind of relation is there between cash and cash equivalent with current assets and current liabilities?
Answer:
Current assets and current liabilities has inverse relationship with cash and cash equivalent.

Question 13.
If the equity shartes or debentures are isuued at a premium then where the amount of premium is recorded in cash flow statement?
Answer:
If the equity share or debentures are issued at a premium then the amount of premium is recorded /as cash inflow of financing activity.

Question 14.
In which activity bank overdraft and cash credit in included? why?
Answer:
Because of bank overdraft and cash credit is short-term lending amount so it is included in financing activity.

Question 15.
What is the effect of conversion of debenture into share on cash flow ?
Answer:
In the transaction of conversion of debenture into share, no cash movement is there and there is no creation of cash flow.

Select the right answer for each question:

Question 1.
Which one is the first number liquid assets from the all the assets of business?
(A) Stock
(B) Cash
(C) Debtors
(D) Bills receivable
Answer:
(B) Cash

Question 2.
Cash equivalent means ………………………. .
(A) Short-term investment
(B) Government securities
(C) Lang-term investment
(D) Investment which are not converted speedily in cash.
Answer:
(A) Short-term investment

Question 3.
Short term bank deposit …………………….. .
(A) Cash equivalent
(B) Operating activity
(C) Financing activity
(D) Investing activity
Answer:
(A) Cash equivalent

Question 4.
Current assets and current liabilities as result of which activity?
(A) Operating activity
(B) Investing activity
(C) Financing activity
(D) None of the above.
Answer:
(A) Operating activity

Question 5.
Which of the following transaction is not a operating transaction?
(A) Written off Depreciation
(B) Written off Fictitious Assets
(C) Written off Intangible Assets
(D) Proposed Dividend
Answer:
(D) Proposed Dividend

Question 6.
Which of the following is Included In non-operating Income?
(A) Depreciation
(B) Rent income on assets
(C) Commission received
(D) income tax refund
Answer:
(B) Rent income on assets

Question 7.
Which of the following transaction is always a transaction of operating activity?
(A) Dividend received
(B) Employees welfare expenses
(C) Interest paid on loan
(D) Rent income on Assets.
Answer:
(B) Employees welfare expenses

Question 8.
Self-constructed Assets is ………………………. .
(A) Cash outflow of operating activity
(B) Cash inflow of financing activity
(C) Cash outflow of financing activity
(D)Cash inflow of investing activity
Answer:
(C) Cash outflow of financing activity

Question 9.
Redemption of preference shares is ………………………… .
(A) Cash outflow of operating activity
(B) Cash outflow of investing activity
(C) Cash inflow of financing activity
(D) Cash outflow of financing activity
Answer:
(D) Cash outflow of financing activity.

Question 10.
Cash withdraw from bank is ……………………………… .
(A) Not a transaction of cash flow
(B) Cash inflow of operating activity
(C) Cash inflow of financing activity
(D) Cash inflow of investing activity
Answer:
(A) Not a transaction of cash flow