Difference Between Cash Flow & Funds Flow Statement - MCQs

Difference Between Cash Flow & Funds Flow Statement - MCQs


1. Cash flow statement is based upon _________ while Funds Flow Statement recognizes _______.

a) Cash basis of accounting, accrual basis of accounting
b) Accrual basis of accounting, cash basis of accounting
c) Both are based on cash basis of accounting
d) None of the above

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ANSWER:a) Cash basis of accounting, accrual basis of accounting



2. Statement of changes in working capital is prepared separately in

a) Cash Flow Statement
b) Funds Flow Statement
c) Both a and b
d) None of the above

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ANSWER: b) Funds Flow Statement



3. Cash Flow Statement studies causes of change in working capital.

a) True
b) False

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ANSWER: b) False



4. _________ reconciles the opening cash balance with the closing cash balance of a given period on the basis of net decrease or increase in cash during that period.

a) Cash Flow Statement
b) Funds Flow Statement
c) Both a and b
d) None of the above

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ANSWER: a) Cash Flow Statement



5. Which of the following statements are true?

A) Cash flow statement is more useful for short term cash planning.
B) Funds Flow statement is more useful in planning medium term and long term financing.
C) Cash Flow statement discloses the position of liquidity in a better way

a) Only A
b) Only B
c) Only C
d) A, B and C

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ANSWER: d) A, B and C



6. _____ has/have accepted cash flow statement is more useful than funds flow statement, particularly from view of analysis of liquidity of a firm.

a) Institute Of Chartered Accountants of India
b) FASB, America
c) SEBI
d) All of the above

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ANSWER: d) All of the above


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