A-AS Level (CIE) Accounting Paper-3: Specimen Questions with Answers 48 - 49 of 50

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Question 48

Question

MCQ▾

Which of the following is not included in cash flow statement?

Choices

Choice (4)

a.

Interest received

b.

Dividend received

c.

Proceeds from issue of share capital

d.

Return on Capital employed

Answer

d.

Explanation

Cash flow discloses changes in cash position. Sound cash position means sound funds position as inflow of cash necessarily involves inflow of funds. In case of cash flow statements an increase in the current liability or decrease in current assets result in increase in cash and vice versa. Inflows and outflows of cash is classified into the following categories:

  • Operating Activities
  • Investing Activities
  • Financing Activities

Classification of all activities into these three categories helps the users of cash flow to assess the effect of these activities on the cash and cash equivalents of an enterprise.

Question 49

Question

MCQ▾

Following is the information from the books of JKL ltd.

Following is the Information from the Books of JKL Ltd
ParticularsPurchases $Sales $
Machinery

Building

Investment

Goodwill

Patents and trademarks

12,500

25,000

1,250

1,750

2,500

1,25, 000

-

1,750

-

500

Choices

Choice (4)

a.

$ 86,750

b.

$ 80,000

c.

$ 40,000

d.

$ 68,750

Answer

a.

Explanation

Following is the Information from the Books of JKL Ltd
Cash Flow from Investing activities$
Add:

Less:

Sale of Machinery 1,25, 000

Sale of Investment 1,750

Sale of Patent and Trademarks 500

Purchase of machinery 12,500

Purchase of building 25,000

Purchase of investments 1,250

Purchase of goodwill 1,750

1,27, 250

40,500

Cash flow from investing activities86,750

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