state whether the following statements are true or false 609259

Aug 29, 2021 | Uncategorized

State whether the following statements are True or False

  1. Inflow of cash refers to all transactions that lead to increase in cash and cash equivalents.
  2. Outflow of cash refers to all transactions that lead to decrease in cash and cash equivalents.
  3. Non-cash transactions are covered in cash flow statements.
  4. Cash sales – cash outflow.
  5. Cash receipts from debtors are financing activity.
  6. Cash payment relating to a future contract is an investing activity.
  7. Cash receipts from debtors are treated as cash inflow for operating activities.
  8. Cash receipts on interest and dividend are treated as cash inflow for financing activities.
  9. Cash proceeds from issuing share are treated as cash inflow from financing activities.
  10. Cash receipts from sale of fixed assets are shown as cash inflow from financing activities.
  11. Cash payment to creditors is treated as cash outflow for investing activities.
  12. The cash flow statement is based upon accrual basis of accounting.
  13. Redemption of preference shares is an investing activity.
  14. Cash payment to income tax is operating activity.
  15. Repayment of any finance liability is financing activity.
  16. Cash proceeds from long-term borrowings are an investing activity.
  17. Cash receipts from royalties are operating activity.
  18. Cash flow statement is concerned with change in working capital position between the two different dates of balance sheet.
  19. Cash payment to creditors is a financing activity.
  20. Accounting standard (AS)–3 sets standards to the preparation of cash flow statement.
  21. Bank balance is cash equivalent in the preparation of cash flow statement.
  22. Decrease in current assets will result in increase in cash.
  23. Increase in current liabilities will result in decrease in cash.
  24. If there is net loss (negative cash from operation) then there is net outflow of cash from operating activities.
  25. Acquisition and disposal of long-term asset is termed as “Investing Activities” of a concern.
  26. A change in owners” capital and borrowing capital is revealed in cash flow from financing activities of a concern.
  27. If there is negative cash from activities, then there will be net inflow of cash.
  28. Revaluation of building affects cash flows.
  29. Sources of cash and uses of cash are to be equal.
  30. Sources of cash should always be more than uses of cash.