Cash Flow Statement MCQs

MCQs 1-10


1. Which of the following items would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities?

Correct! Wrong!

2. Which of the following would be considered a cash-flow item from a "financing" activity?

Correct! Wrong!

3. The method for presenting Net cash provided by operating activities that starts with net income and adjusts it for items that affected reported net income but that did not affect cash is called the?

Correct! Wrong!

4. Cash paid for preferred stock dividends should be shown on the statement of cash flows under?

Correct! Wrong!

5. Which of the following would not be considered a cash flow from “operating” activities?

Correct! Wrong!

6. In the long run, a business must generate positive net cash flow from which of the following activities, if it is to survive?

Correct! Wrong!

7. Depreciation is added back to profit when arriving at the cash flow from operating activities because?

Correct! Wrong!

8. A company purchased the land in exchange for the capital stock; it would affect which of the following?

Correct! Wrong!

9. Which of the following would not represent the cash outflows for the business?

Correct! Wrong!

10. The statement of cash flows does not include cash inflows and outflows for which of the following activities?

Correct! Wrong!

MCQs 11-20


11. The primary purpose of the statement of cash flows is to?

Correct! Wrong!

12. If a company purchased treasury stock with cash, this would be reported on the statement of cash flows as?

Correct! Wrong!

13. When equipment is sold for cash, the amount received is reflected as cash?

Correct! Wrong!

14. Which of the following is not an example of cash equivalents?

Correct! Wrong!

15. Which of the following cash flows results from an operating activity?

Correct! Wrong!

16. Which of the following cash flows results from a financing activity?

Correct! Wrong!

17. Which of the following cash flows results from a financing activity?

Correct! Wrong!

18. The two approaches to reporting cash flows provided by operating activities are?

Correct! Wrong!

19. In preparing cash flows provided by operating activities using the indirect method, which of the following items is added to net income?

Correct! Wrong!

20. Which of the following would be considered an investing activity and a source of cash?

Correct! Wrong!


Mukharji, A., & Hanif, M. (2003). Financial Accounting (Vol. 1). New Delhi: Tata McGraw-Hill Publishing Co.

Narayanswami, R. (2008). Financial Accounting: A Managerial Perspective. (3rd, Ed.) New Delhi: Prentice Hall of India.

Ramchandran, N., & Kakani, R. K. (2007). Financial Accounting for Management. (2nd, Ed.) New Delhi: Tata McGraw Hill.


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