Tag: cash flow statement

Questions Related to cash flow statement

The term 'funds' as used in fund flow statement means ________________.

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  1. Cash

  2. Current assets

  3. Current liabilities

  4. Current assets and liabilities

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Correct Option: B
Explanation:

Fund flow statement is a statement of cash inflows and cash outflows. There are persons who feel that the funds are cash or working capital which represent the excess of current assets over current liabilities. The term flow means movement and includes both inflows and outflows of resources.And the funds used in the flow statement is a current assets.

Decrease in working capital appear in fund flow statement in _________ side.

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  1. Sources

  2. Application

  3. Both (A) and (B)

  4. None of the above

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Correct Option: A
Explanation:

Working capital is current assets less current liabilities. A decrease in the net current assets leads to increase in fund flow which needs to be included. Hence, It appear in sources.

Which one of the following is not a method of credit control?

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. Bank rate policy

  2. Open market operations

  3. Credit deposit ratio

  4. Cash reserve ratio

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Correct Option: D

Which of the following is the limitation of the cash flow statement?

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  1. Historical in nature.

  2. Discloses Success or Failure of Cash Planning.

  3. Reasons for Cash positions.

  4. Comparative study.

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Correct Option: A

Short-term Investments and Marketable Securities are included in Cash and Cash Equivalent.

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  1. True

  2. False

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Correct Option: A

Cash Flow Statement helps in understanding liquidity and solvency.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. True

  2. False

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Correct Option: A

Cash Flow Statement does not disclose the ________ .

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. cash inflow

  2. cash outflow

  3. financial position

  4. none of the above

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Correct Option: C

Investing Activities are the acquisition and disposal of long-term assets and other investments included in cash equivalents.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. True

  2. False

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Correct Option: B

Operating activities are the principal revenue producing activities of the enterprise and other activities that are not investing or financing activities.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. True

  2. False

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Correct Option: A

Which of the following is not the objective of cash flow statement?

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. To show cash and cash equivalent generated.

  2. To show cash and cash equivalent used.

  3. To show net changes in cash and cash equivalents.

  4. None of the above

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Correct Option: D
Explanation:

The main objective of preparing cash flow statement for a particular accounting period is to present information regarding inflow and outflow of cash, cash and cash equivalent generated , used, and net changes in cash flows.

Besides,

It presents the investment and financial activities of a concern for a particular period. It also fulfills the following objectives;

  • Ensuring future positive cash flow of particular concern.
  • Ensuring capacity of an organization to pay a dividend.
  • Identifying non-cash items ensuring cash income and expenses of a concern.
  • Comparing various items of the current year with those of last year.