Preparation Of Funds Flow Statement - MCQs

Preparation Of Funds Flow Statement - MCQs


1. Which statement is prepared in the process of funds flow analysis?

a) Schedule of changes in working capital
b) Funds Flow Statement
c) Both a and b
d) None of the above

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ANSWER: a) Schedule of changes in working capital



2. Funds Flow Statement is prepared on the basis of data of P&L statement and two consecutive balance sheets.

a) True
b) False
c) Value delivery
d) None of the above

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ANSWER: a) True



3. Which of the following rules stands true while preparation of Schedule of changes in working capital?

A) An increase in current assets increases working capital.
B) An increase in current assets decreases working capital.
C) An increase in current liabilities decreases working capital.
D) An increase in current liabilities increases working capital

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

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ANSWER: a) A and C



4. If reserve for bad and doubtful debts is mentioned in the question of Funds Flow Statement Preparation, it can be shown as

a) In the schedule by deducting from total debtors under current assets
b) In the schedule separately under the heading of capital liabilities
c) Both a & b
d) None of the above

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ANSWER: c) Both a & b



5. Funds Flow Statement is also known as

a) Statement of Funds Flow
b) Statement of Sources and Application of Funds
c) Statement of Sources and Uses of Funds
d) All of the above

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ANSWER: d) All of the above



6. Given Net profit for the year Rs 2, 50,000 Transferred to general reserves Rs 40,000 and old machinery bought for Rs 50,000 was sold for Rs 20,000. Calculate funds from operations.

a) Rs 2, 80,000
b) Rs 2, 20,000
c) Rs 2, 90,000
d) Rs 3, 00,000

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ANSWER: a) Rs 2, 80,000



7. Which of the following are sources of funds?

A) Issue of bonus shares
B) Issue of shares against the purchase of fixed assets
C) Conversion of debentures into shares
D) Conversion of loans into shares

a) A and C
b) A and D
c) A, B, C and D
d) None of the above

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ANSWER: d) None of the above


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    Discussion

  • RE: Preparation Of Funds Flow Statement - MCQs -praveen (08/21/20)
  • Funds from operations = 2,80,000
    Step by step Explanation:
    Funds from operations = Net income + intrest expense + Depreciation + Loss on the sale of companie's assets - intrest income - gain on the sale of companie's assets.
    We have given here,

    Net income = 2,50,000
    buying price of asset = 50,000
    selling price of asset = 20,000
    loss on the sale of an asset = buying price - selling price



    Funds from operations = Net income + loss on the sale of an asset



  • RE: Preparation Of Funds Flow Statement - MCQs -Abhitha (05/19/20)
  • Can i get the explanation for 6th question