Tag: commercial studies

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Questions Related to commercial studies

Multiple choice commercial studies budgeting meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement statement of changes in financial position

Cash flows include _______________.

  1. Cash receipts only

  2. Cash payments only

  3. both (A) and (B)

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Cash flow is the net amount of cash and cash equivalents being transferred into and out of a business. It encompasses both cash receipts (inflows) and cash payments (outflows).

Multiple choice commercial studies budgeting meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement statement of changes in financial position

Cash received from debtors _______________.

  1. Sources of funds

  2. Sources of cash

  3. Application of funds

  4. No flow of fund
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a cash payment is received from the debtor, cash is increased and the accounts receivable is decreased. When recording the transaction, cash is debited, and accounts receivable are credited.

A debtor is a person, company, or other entity that owes money. In other words, the debtor has a debt or legal obligation to pay the amount owed. So the cash received from debtors is no flow of funds.

Multiple choice commercial studies budgeting meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement statement of changes in financial position

If there is no inflation during a period, then the money cashflow would be equal to _____________.

  1. Present value

  2. Real cash flow

  3. Real cash flow + present value

  4. Real cash flow present value
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Inflation is defined as the increase in prices of general goods and services. If there is no inflation during a particular period, there will be no impact on cash flows. The money cash flow must be equal to real cash flow.

Multiple choice commercial studies budgeting meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement statement of changes in financial position

The Real Cashflows must be discounted to get the present value 'M' at a rate equal to ________________.

  1. Money Discount Rate

  2. Inflation Rate

  3. Real Discount Rate

  4. Risk free rate of interest
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

To calculate the present value of real cash flows, one must use a real discount rate, which excludes the effects of inflation. Using a money (nominal) discount rate would be appropriate only for nominal cash flows.