Fund Flow and Cash Flow Statements MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Fund Flow and Cash Flow Statements, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Fund Flow and Cash Flow Statements MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Fund Flow and Cash Flow Statements mcq questions that explore various aspects of Fund Flow and Cash Flow Statements problems. Each MCQ is crafted to challenge your understanding of Fund Flow and Cash Flow Statements principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Fund Flow and Cash Flow Statements MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

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Fund Flow and Cash Flow Statements MCQs | Page 3 of 4

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Q21.
In the context of insurance business, what do Financing Activities involve?

a.

Changes in the investment portfolio

b.

Changes in shareholders' funds, policyholders' funds, and borrowings

c.

Acquisition of short-term assets

d.

Cash payments for operating expenses

Discuss
Answer: (b).Changes in shareholders' funds, policyholders' funds, and borrowings Explanation:In insurance business, Financing Activities involve changes in shareholders' funds, policyholders' funds, and borrowings.
Q22.
According to Accounting Standard 3 (Revised), what does the treatment of cash flows of special items include?

a.

Foreign Currency Cash Flows only

b.

Extraordinary Items only

c.

Interest & Dividends only

d.

Various special items such as Foreign Currency Cash Flows, Extraordinary Items, Interest & Dividends, Taxes on Income, Acquisition and Deposits of Subsidiaries and other Business units, and Non-cash Transactions

Discuss
Answer: (d).Various special items such as Foreign Currency Cash Flows, Extraordinary Items, Interest & Dividends, Taxes on Income, Acquisition and Deposits of Subsidiaries and other Business units, and Non-cash Transactions Explanation:Accounting Standard 3 (Revised) provides for the treatment of cash flows of various special items, including Foreign Currency Cash Flows, Extraordinary Items, Interest & Dividends, Taxes on Income, Acquisition and Deposits of Subsidiaries and other Business units, and Non-cash Transactions.
Q23.
What documents and data are crucial for the preparation of Cash Flow Statements?

a.

Income statements and tax returns

b.

Balance Sheets for Comparative study

c.

Marketing reports and customer feedback

d.

Employee payroll records

Discuss
Answer: (b).Balance Sheets for Comparative study Explanation:The preparation of Cash Flow Statements involves analyzing Balance Sheets at the beginning and end of the financial year for comparative study.
Q24.
What is the purpose of analyzing the Statement of Profit & Loss Account in the context of Cash Flow Statements?

a.

To determine the market share of the organization

b.

To ascertain changes in assets and liabilities

c.

To calculate the amount of cash provided by or used in operations

d.

To assess employee performance

Discuss
Answer: (c).To calculate the amount of cash provided by or used in operations Explanation:The Statement of Profit & Loss Account helps in determining the amount of cash provided by or used in operations after making adjustments for non-cash current assets or liabilities.
Q25.
Apart from Balance Sheets and Profit & Loss Account, what additional data is needed for Cash Flow Statements preparation?

a.

Employee salary details

b.

Marketing expenses

c.

Additional data related to assets and liabilities

d.

Customer satisfaction surveys

Discuss
Answer: (c).Additional data related to assets and liabilities Explanation:In addition to Balance Sheets and Profit & Loss Account, additional data related to assets and liabilities is collected to determine how cash has been provided or used for the purchase or sales of assets for cash.
Q26.
What is the primary definition of a Fund Flow Statement?

a.

A report on the financial performance of a business

b.

A statement of sources and application of funds, analyzing changes in financial positions between two periods

c.

A summary of income and expenses for a specific time period

d.

A record of cash inflow and outflow for a given financial year

Discuss
Answer: (b).A statement of sources and application of funds, analyzing changes in financial positions between two periods Explanation:A Fund Flow Statement is defined as a statement of sources and application of funds, showing the analysis of changes in the financial positions of an enterprise between two financial periods or balance sheet dates.
Q27.
How is the term "flow of funds" defined?

a.

Movement of money within a bank

b.

Transfer of economic values from one asset to another or a liability

c.

Cash transactions within a business

d.

Revenue generated from sales activities

Discuss
Answer: (b).Transfer of economic values from one asset to another or a liability Explanation:The flow of funds is defined as the transfer of economic values from one asset to another or a liability.
Q28.
What does "Fund" mean?

a.

Profit generated by a business

b.

Long-term investments in the stock market

c.

Working capital, the excess of current assets over current liabilities

d.

Revenue from selling goods or services

Discuss
Answer: (c).Working capital, the excess of current assets over current liabilities Explanation:"Fund" is defined as working capital, which is the excess of current assets over current liabilities.
Q29.
What is the formula given for calculating Funds?

a.

Funds = Long-term Borrowings - Current Assets

b.

Funds = Net Profit + Non-current Assets

c.

Funds = Working Capital = Current Assets - Current liabilities

d.

Funds = Total Assets - Total Liabilities

Discuss
Answer: (c).Funds = Working Capital = Current Assets - Current liabilities Explanation:The formula for calculating Funds is Funds = Working Capital = Current Assets - Current liabilities.
Q30.
What are the outlined sources of working capital?

a.

Profits from business operations and revenue from sales

b.

Incomes from Other Sources and Long-term Borrowings

c.

Sales of Non-current Assets and Dividend/Interest Received

d.

Funds from business operation, Incomes from Other Sources, Fresh introduction of capital or Issue of Additional capital, Long-term Borrowings, Sale of Non-current Assets

Discuss
Answer: (d).Funds from business operation, Incomes from Other Sources, Fresh introduction of capital or Issue of Additional capital, Long-term Borrowings, Sale of Non-current Assets Explanation:The outlined sources of working capital include funds from business operation, incomes from other sources, fresh introduction of capital, long-term borrowings, and sale of non-current assets.
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