MCQ for CA Intermediate ACCOUNTING - Chapter 4 - FINANCIAL STATEMENTS OF COMPANIES

Sample Multiple Choice Questions (MCQ's) for CA Intermediate - Paper 1 - ACCOUNTING - Chapter 4: FINANCIAL STATEMENTS OF COMPANIES - For Practice relevant for May/November 23 Examinations

 

UNIT 1:  PREPARATION OF FINANCIAL STATEMENTS

 

Q1.   Trade payables as per Schedule III will include:

  1. Dues payable in respect to statutory obligation
  2. Interest accrued on trade payables
  3. Bills payables.

Answer: 3

Q2.   Current maturities of long term debt will come under

  1. Current Liabilities
  2. Short term borrowings.
  3. Long term borrowings

Answer: 1

Q3.   If there is increase in managerial remuneration, exceeding the overall ceiling as given in section 198 of the Companies Act, then sanction of which authority is required?

  1. Registrar of the company.
  2. Central Government.
  3. Board of Directors of the company

Answer: 2

Q4.   Declaration of dividends for current year is made after providing for

  1. Depreciation of past years only.
  2. Depreciation on assets for the current year and arrears of depreciation of past years (if any).
  3. Depreciation on current year only and by forgoing arrears of depreciation of past years.

Answer: 2

Q5.   Which of the following is not a current liability as per Schedule III?

  1. Bank overdraft
  2. Net deferred tax liability
  3. Dividend declared. 

Answer: 2

Q6.   Few friends created a start-up and formed private company for production and marketing of product. At the end of financial year, their company is not required to prepare:

  1. Cash flow statement
  2. Balance Sheet and Profit & Loss Account
  3. Notes to Accounts. 

Answer: 1

 

UNIT 2:  CASH FLOW STATEMENTS 

 

Q1.   While preparing cash flow statement, conversion of debt to equity

  1. Should be shown as a financing activity.
  2. Should be shown as an investing activity.
  3. Should not be shown as it is a non-cash transaction

Answer: 3

Q2.   Which of the following would be considered a ‘cash-flow item from an “investing" activity’? 

  1. Cash outflow to the government for taxes.
  2. Cash outflow to purchase bonds issued by another company.
  3. Cash outflow to shareholders as dividends. 

Answer: 2

Q3.   Hari Uttam, a stock broking firm, received ₹ 1,50,000 as premium for forward contracts entered for purchase of equity shares. How will you classify this amount in the cash flow statement of the firm?

  1. Operating Activities.
  2. Investing Activities.
  3. Financing Activities.

Answer: 1

Q4.  Cash repayments of amounts borrowed will be disclosed in the cash flow statement as

  1. An operating activity.
  2. A financing activity
  3. An investing activity

Answer: 2

Q5.  While preparing a Cash Flow Statement using the Indirect method as required under AS 3, which of the following will be deducted from the Net Profit to arrive at the “Cash flow from Operating activities”?

  1. Interest income
  2. Gain on sale of a Fixed asset.. 
  3. Both (a) and (b)

Answer: 3

Q6.  XYZ Co. Ltd is a financial Institute and has given loans and advances to its subsidiary and earned interest of ₹ 5 lacs on that loan. Interest earned by XYZ Co. Ltd is shown as 

  1. Operating Cash Flow. 
  2. Investing Cash Flow
  3. Financing Cash Flow

Answer: 1

 

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