Which of the following is NOT a method of preparing a cash flow statement? MCQ with Answer and Explanation

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Which of the following is NOT a method of preparing a cash flow statement?

A. Both A and B are methods

B. Direct Method

C. Indirect Method

D. FIFO Method

Answer: Option D

Solution (By JKSSB Mock Tests)

Cash flow statements can be prepared using the Direct or Indirect method. FIFO is an inventory valuation method, not a cash flow statement method.

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Question #1

Under the straight-line method of depreciation, the depreciation amount:

A. Remains constant every year

B. Decreases every year

C. Is based on usage

D. Increases every year

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Correct Answer: Option A

Explanation:
Straight-line method charges equal amount of depreciation each year over the useful life of the asset.

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Question #2

S1: The Profit and Loss Appropriation Account is prepared by a company. S2: The Profit and Loss Appropriation Account is prepared by a partnership firm. Which statement(s) is/are correct?

A. S1 only

B. Neither S1 nor S2

C. Both S1 and S2

D. S2 only

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Correct Answer: Option D

Explanation:
A company does not prepare a Profit and Loss Appropriation Account; it transfers profits to reserves and dividends via the Statement of Changes in Equity. Only a partnership firm prepares this account to distribute profits among partners. S1 is incorrect, S2 is correct.

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Question #3

Which of the following is not a function of cost accounting?

A. Cost control

B. Ascertaining cost

C. Assisting in decision making

D. Preparation of financial statements

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Correct Answer: Option D

Explanation:
Preparation of financial statements is the function of financial accounting, not cost accounting.

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