Cash Flow Accounting MCQs for Accountant, Account Officer , Sub Accountant
Which of the following is an example of a cash inflow?
a. Payment of rent
b. Purchase of inventory
c. Collection of accounts receivable
d. Payment of salaries
Answer: c. Collection of accounts receivable
Which of the following is an example of a cash outflow?
a. Sale of equipment
b. Issuance of stock
c. Payment of dividends
d. Receipt of a loan
Answer: c. Payment of dividends
Which of the following is NOT a component of cash flow?
a. Cash inflows from operating activities
b. Cash outflows from investing activities
c. Cash inflows from financing activities
d. Depreciation expenses
Answer: d. Depreciation expenses
A positive cash flow from operating activities indicates that:
a. The company is generating cash from its core business operations
b. The company is investing in new projects
c. The company is borrowing more money
d. The company is paying dividends to shareholders
Answer: a. The company is generating cash from its core business operations
Which of the following is a cash flow ratio that measures a company’s ability to pay its short-term debts with its available cash?
a. Debt-to-equity ratio
b. Current ratio
c. Quick ratio
d. Gross margin ratio
Answer: c. Quick ratio
Cash Flow Accounting MCQs for FPSC, PPSC, KPPSC, SPSC Account officer test
Which of the following is an example of a non-cash item that may affect a company’s cash flow statement?
a. Payment of dividends
b. Depreciation expenses
c. Purchase of inventory
d. Sale of a long-term asset
Answer: b. Depreciation expenses
Which of the following is an example of a cash flow from financing activities?
a. Payment of salaries to employees
b. Purchase of equipment
c. Issuance of bonds
d. Sale of products to customers
Answer: c. Issuance of bonds
The cash flow statement shows the changes in a company’s cash balance over a specific period. Which of the following financial statements also shows this information?
a. Income statement
b. Balance sheet
c. Statement of retained earnings
d. None of the above
Answer: b. Balance sheet
The cash flow statement is divided into three sections: operating activities, investing activities, and financing activities. Which section would the purchase of a long-term asset be classified under?
a. Operating activities
b. Investing activities
c. Financing activities
d. None of the above
Answer: b. Investing activities
Which of the following is a cash flow ratio that measures a company’s ability to generate cash from its operations after taking into account its capital expenditures?
a. Cash conversion cycle
b. Free cash flow
c. Debt coverage ratio
d. Return on investment
Answer: b. Free cash flow
Cash Flow Accounting MCQs for ETEA, PTS, ATS, NTS,
Which of the following is an example of a cash outflow from investing activities?
a. Sale of equipment
b. Payment of dividends
c. Purchase of inventory
d. Purchase of a long-term investment
Answer: d. Purchase of a long-term investment
Which of the following is an example of a cash inflow from financing activities?
a. Repayment of a loan
b. Issuance of stock
c. Payment of accounts payable
d. Sale of a long-term asset
Answer: b. Issuance of stock
The cash flow statement can help investors and creditors assess a company’s liquidity and financial health. True or false?
Answer: True
Which of the following is a cash flow ratio that measures a company’s ability to meet its debt obligations using its cash flow from operations?
a. Debt service coverage ratio
b. Operating cash flow ratio
c. Price-to-cash flow ratio
d. Times interest earned ratio
Answer: a. Debt service coverage ratio
Which of the following is an example of a cash outflow from financing activities?
a. Payment of dividends
b. Collection of accounts receivable
c. Purchase of inventory
d. Payment of salaries to employees
Answer: a. Payment of dividends
The indirect method and the direct method are two methods used to prepare the cash flow statement. Which method is more commonly used?
a. Indirect method
b. Direct method
c. Both methods are equally used
d. It depends on the company’s preference
Answer: a. Indirect method
Cash Flow Accounting MCQs for Accounts Exam
Which of the following is an example of a cash inflow from investing activities?
a. Payment of dividends
b. Purchase of equipment
c. Sale of a long-term investment
d. Payment of accounts payable
Answer: c. Sale of a long-term investment
Which of the following is an example of a cash outflow from operating activities?
a. Receipt of cash from customers
b. Payment of taxes
c. Sale of a long-term asset
d. Issuance of bonds
Answer: b. Payment of taxes
The cash flow statement can help a company identify its sources and uses of cash. True or false?
Answer: True
Which of the following is a cash flow ratio that measures a company’s ability to generate cash from its core business operations?
a. Gross margin ratio
b. Cash conversion cycle
c. Operating cash flow ratio
d. Debt coverage ratio
Answer: c. Operating cash flow ratio
Which of the following is an example of a cash inflow from financing activities?
a. Repayment of a loan
b. Purchase of equipment
c. Collection of accounts receivable
d. Issuance of bonds
Answer: d. Issuance of bonds
Which section of the cash flow statement would the payment of interest on a loan be classified under?
a. Operating activities
b. Investing activities
c. Financing activities
d. None of the above
Answer: a. Operating activities
Which of the following is a cash flow ratio that measures a company’s ability to pay off its current liabilities with its available cash?
a. Quick ratio
b. Debt-to-equity ratio
c. Operating cash flow ratio
d. Current ratio
Answer: d. Current ratio
Cash Flow Accounting MCQs
A negative cash flow from operating activities indicates that:
a. The company is generating cash from its core business operations
b. The company is investing in new projects
c. The company is borrowing more money
d. The company is having difficulty generating cash from its core business operations
Answer: d. The company is having difficulty generating cash from its core business operations
Which of the following is an example of a non-operating item that may affect a company’s cash flow statement?
a. Payment of salaries
b. Sale of products to customers
c. Sale of a long-term asset
d. Purchase of inventory
Answer: c. Sale of a long-term asset