Cash Flow Statement Class 12 Accountancy Important Questions

Important Questions Class 12

Please refer to Cash Flow Statement Class 12 Accountancy Important Questions with solutions provided below. These questions and answers have been provided for Class 12 Accountancy based on the latest syllabus and examination guidelines issued by CBSE, NCERT, and KVS. Students should learn these problem solutions as it will help them to gain more marks in examinations. We have provided Important Questions for Class 12 Accountancy for all chapters in your book. These Board exam questions have been designed by expert teachers of Standard 12.

Class 12 Accountancy Important Questions Cash Flow Statement

Question. How will you classify deposits by customers in HDFC Bank while preparing cash flow statement.
Answer : Operating Activities.

Question. From the following profit or loss account find out the flow of cash from operating activities of Mohan Ltd.

Analysis of Financial Statements Class 12 Accountancy Important Questions

Note: There was increase in Closing stock by Rs. 25,000.
Answer : Cash from Operating Activities Rs.1,03,800.

Question. Cash flow from operating Activities + Cash flow from Investing Activities + Cash flow from Financing Activities =……………………………………
Answer : …= Net Increase /Decrease in cash and Cash Equivalents.

Question. Why is the cash flow statement not a suitable judge of profitability ?
Answer : Cash Flow statement is prepared on cash basis of accounting but profit is calculated on accrual basis. So cash flow statement is not a judge of profitability.

Question. How will you classify loans given by Tata Manufacturing Company.
Answer : Classified as Financing Activities.

Question. How will you classify loans given by Birla Finance Ltd.? While preparing cash flow statement.
Answer : As Operating Activities.

Question. What are the two methods which can be employed to calculate net cash flow from operating activities ?
Answer : Direct Method and Indirect Method.

Question. A company receives a dividend of Rs. 2 Lakhs on its investment in other company’s share will it be Cash inflow from operating or investing activities in case of a.
(i) Finance Company.
(ii) Non-Finance Company.
Answer : It will be operating activities in case of a finance company and investing activities in case of Non-Financing Company.

Question. Where will you show purchase of computer in cash flow statement ?
Answer : As Outflow under Investing Activities.

Question. Modern Toys Ltd. Purchased a machinery of Rs.20,00,000 for manufacturing toys. State giving reason Whether the cash flow due to the purchase of machinery will be cash flow from operating activities, Investing activities or Financing activities ?
Answer : Investing Activities Because …………….

Question. Why do we add back depreciation to net profit while calculating cash flow from operating activities.
Answer : Depreciation reduces the net profit without reducing the cash balance as it is a non-cash item.

Question. Prepare Cash flow Statement from the following information of Box Ltd. For the year ended March 31,2004.

Analysis of Financial Statements Class 12 Accountancy Important Questions

Additional Information :
1.Investment costing Rs.50,000 were sold for Rs. 48,000 during the year.
2.Tax paid during the year Rs.70,000.
3.Interest received on Investment Rs. 12,000.
Answer : (i) Cash Inflow From Operating Activities Rs.80,000.
(ii)Cash Outflow on Investing Activities Rs.1,60,000,
(iii)Cash Inflow From Financing Activities Rs. 1,00,000.

Question. How are various activities classified as per AS-3 (Revised) ?
Answer : (i) Operating Activities.
(ii)Investing Activities.
(iii)Financing Activities.

Question. Under which accounting standard , cash flow statement is prepared ?
Answer : Under accounting standard-3(Revised).

Question. Give two examples of ‘ Significant non cash transactions ‘.
Answer : Give any two examples-
(i) Acquisition of fixed asset by issue of debentures or shares.
(ii) Conversion of debentures into shares.

Question. Escorts Ltd. Engaged in the business of manufacturing tractors invested Rs.40,00,000 in the shares of a Car manufacturing Company. state with reason whether the dividend received on this investment will Be cash flow from operating activities or Investing activities.
Answer : Investing Activities Because …………….

Cash Flow Statement Class 12 Accountancy Important Questions