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 4 of 4

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Q31.
What is considered an application of working capital or funds?

a.

Profit from business operations

b.

Purchase of non-current assets

c.

Sale of non-current assets

d.

Dividend paid to shareholders

Discuss
Answer: (b).Purchase of non-current assets Explanation:The purchase of non-current assets is considered an application of working capital or funds.
Q32.
What does a Cash Flow Statement report?

a.

Net profit and loss

b.

Cash transactions only

c.

Cash receipts and cash payments classified by major activities

d.

Balance of assets and liabilities

Discuss
Answer: (c).Cash receipts and cash payments classified by major activities Explanation:A Cash Flow Statement reports cash receipts and cash payments classified according to the firm's major activities, namely Operating Activities, Investing Activities, and Financing Activities during the period of reporting.
Q33.
How is "Cash" defined?

a.

Long-term investments in the stock market

b.

Revenue generated from sales activities

c.

Cash on hand and demand deposits with banks of the corporate office and its operational units including overseas ones

d.

Profit earned by a business

Discuss
Answer: (c).Cash on hand and demand deposits with banks of the corporate office and its operational units including overseas ones Explanation:"Cash" comprises cash on hand and demand deposits with banks of the corporate office and its operational units, including overseas ones.
Q34.
What is the definition of Cash Equivalents?

a.

Long-term investments subject to significant value changes

b.

Short-term, highly liquid investments with significant risk of changes in value

c.

Short-term, highly liquid investments that are readily convertible into known amounts of cash and have insignificant risk of changes in value

d.

Investments held for long-term purposes

Discuss
Answer: (c).Short-term, highly liquid investments that are readily convertible into known amounts of cash and have insignificant risk of changes in value Explanation:Cash Equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash and have an insignificant risk of changes in value.
Q35.
What is the meaning of Cash Flows?

a.

Inflows and outflows of goods and services

b.

Inflows and outflows of cash and cash equivalents

c.

Profit and loss of a business

d.

Changes in market demand

Discuss
Answer: (b).Inflows and outflows of cash and cash equivalents Explanation:Cash Flows refer to inflows and outflows of cash and cash equivalents, representing the movement of cash into and out of the organization.
Q36.
What are Operating Activities?

a.

Principal revenue-producing activities and other non-operating activities

b.

Cash payments for purchase of fixed assets

c.

Investing activities in the stock market

d.

Borrowing activities to change the size of owners' capital

Discuss
Answer: (a).Principal revenue-producing activities and other non-operating activities Explanation:Operating Activities are defined as the principal revenue-producing activities of a firm and other activities that are not investing or financing activities.
Q37.
How are Investing activities characterized?

a.

Purchase and sale of goods and services

b.

Acquisition and disposals of long-term assets and other investments not included in cash equivalents

c.

Revenue-producing activities and other non-operating activities

d.

Borrowing activities to change the size of owners' capital

Discuss
Answer: (b).Acquisition and disposals of long-term assets and other investments not included in cash equivalents Explanation:Investing activities involve the acquisition and disposals of long-term assets and other investments not included in cash equivalents.
Q38.
What characterizes Financing Activities?

a.

Purchase and sale of goods and services

b.

Changes in the investment portfolio

c.

Borrowings and activities resulting in changes in the size and composition of owners' capital

d.

Cash payments for operating expenses

Discuss
Answer: (c).Borrowings and activities resulting in changes in the size and composition of owners' capital Explanation:Financing Activities are characterized as activities that result in changes in the size and composition of the owners' capital and borrowings of the entity.
Q39.
___________________is 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.

a.

Fund flow statement

b.

Cash flow statement

c.

Balance sheet

d.

Trial balance

Discuss
Answer: (a).Fund flow statement Explanation:A Fund Flow Statement is 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. It focuses on how funds move within an organization, highlighting the sources of funds and how these funds are utilized. The other options (b) Cash flow statement, (c) Balance sheet, and (d) Trial balance are not specifically designed for analyzing changes in financial positions over different periods; they serve different purposes in financial reporting.
Q40.
________________ reports cash receipts and cash payments classified according to the firm 's major activities namely Operating Activities, Investing Activities, and Financing Activities during the period of reporting.

a.

Fund flow statement

b.

Cash flow statement

c.

Balance sheet

d.

Trial balance

Discuss
Answer: (b).Cash flow statement Explanation:A Cash Flow Statement reports cash receipts and cash payments classified according to the firm's major activities, namely Operating Activities, Investing Activities, and Financing Activities during the period of reporting. It provides insights into how cash is generated and utilized by the organization in its various business operations and financial activities. The other options (a) Fund flow statement, (c) Balance sheet, and (d) Trial balance serve different purposes in financial reporting and do not specifically classify cash flows into these major activities.
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