Ch.7 The Statement Of Cash Flows Test Questions & Answers - Smart Accounting 4e | Test Bank Knowles by Cathy Knowles, Mary Carey. DOCX document preview.
Chapter 7: The Statement of Cash Flows
Test Bank
Type: multiple choice question
Title: Chapter 07 Question 01
1) Which of the following would give rise to an outflow of cash during a financial year?
a. An issue of ordinary shares.
b. Taking out a loan
c. The purchase of non-current assets.
d. An increase in trade payables.
Type: multiple choice question
Title: Chapter 07 Question 02
2) Which of the following events would never be an entry on a statement of cash flows for a company that has been in existence for more than one year?
a. Proceeds of a share issue made this year.
b. Increase in inventory held between the beginning and end of the year.
c. Decrease in amount owed by trade receivables between the beginning and end of the year.
d. Accumulated (total) depreciation.
Type: multiple choice question
Title: Chapter 07 Question 03
3) Toby plc made a profit for the year ended 30 September 2023 of £3,330,000 after charging depreciation of £730,000. During that year, inventory increased by £455,000 and trade payables increased by £312,000. Assuming no other factors affected it, the cash generated from operations for the year ended 30 September 2023 was:
a. £3,293,000.
b. £2,743,000.
c. £3,917,000.
d. £4,827,000.
Type: multiple choice question
Title: Chapter 07 Question 04
4) Which of the following would give rise to an inflow of cash during a financial year?
a. The purchase of motor vehicles.
b. A decrease in trade receivables.
c. An increase in the value of inventory held
d. A decrease in trade payables.
Type: multiple choice question
Title: Chapter 07 Question 05
5) Which one of the following would reduce the cash balance of a business and not reduce the profit for the year?
a. Repayment of a loan.
b. The wages charge for the year.
c. The rent payable for the year
d. The electricity charge for the year.
Type: multiple choice question
Title: Chapter 07 Question 06
6) Which of the following statements is correct?
a. Working capital is the initial capital injected into a company.
b. Working capital is a source of long-term finance.
c. Working capital is the minimum amount of capital required to run a business.
d. Working capital is equal to the net investment in current assets and current liabilities.
Type: multiple choice question
Title: Chapter 07 Question 07
7) Jeff has recently started buying and selling commemorative mugs. He buys them for £4 per mug and sells them for £7 each. Since he started trading, he has bought 2,000 and sold 1,800 mugs, all for cash. Which of the following statements is true for the period since trading started?
a. The business has made a profit of £6,000 and has increased its bank balance by £14,000.
b. The business has made a profit of £6,000 and has increased its bank balance by £4,600.
c. The business has made a profit of £5,400 and has increased its bank balance by £4,600.
d. The business has made a profit of £5,400 and has increased its bank balance by £5,400.
Type: multiple choice question
Title: Chapter 07 Question 08
8) Hamish plc expects to have an overdraft at the end of the next financial year. Which one of the following courses of action would increase the bank overdraft?
a. Reducing the level of inventory held.
b. Increasing the credit period allowed to customers.
c. Increasing the time taken to pay suppliers.
d. Renting, instead of purchasing, the new company vans.
Type: multiple choice question
Title: Chapter 07 Question 09
9) Which of the following would NOT be a cash flow from financing activities?
a. Purchase of non-current assets.
b. Dividends paid.
c. Repayment of a loan.
d. Proceeds of a share issue.
Type: multiple choice question
Title: Chapter 07 Question 10
10) Extracts from Tom Ltd's Statement of financial positions are given below:
At year end | At beginning of year | |
£'000 | £'000 | |
Non-current assets | 295 | 240 |
Accumulated depreciation | 150 | 105 |
Net book value | 145 | 135 |
Assuming there were no disposals within the year, which of the following statements is true?
a. During the year, the amount spent on the purchase of non-current assets was £295,000 and the depreciation charge for the year was £150,000.
b. During the year, the amount spent on the purchase of non-current assets was £55,000 and the depreciation charge for the year was £150,000.
c. During the year, the amount spent on the purchase of non-current assets was £295,000 and the depreciation charge for the year was £45,000.
d. During the year, the amount spent on the purchase of non-current asset purchases was £55,000 and the depreciation charge for the year was £45,000.
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Smart Accounting 4e | Test Bank Knowles
By Cathy Knowles, Mary Carey