Tag: commercial studies

Quizzes (186) Questions (1136)

Questions Related to commercial studies

Multiple choice commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

Purposes of an accounting system includes all of the following except _____________.

  1. interpret and record the effect of business transactions

  2. classify the effects of transactions to facilitate the preparation of reports

  3. summarize and communicate information to decision makers

  4. deciding the line of business for an entity
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting systems are designed to record, classify, and summarize financial data to assist in decision-making. Deciding the line of business is a strategic management function, not a function of the accounting system itself.

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

Cash Flow Statement ignores fundamental accounting __________ .

  1. concept

  2. principle

  3. policy

  4. all of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Cash flow statements are based on the cash basis of accounting, whereas the fundamental accounting concept (accrual basis) is ignored in favor of tracking actual cash movements.

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

Cash comprises of ________________.

  1. Cash on hand

  2. Demand deposits with banks.

  3. Both (a) and (b)

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

Cash is money in the form of currency, which includes all bills, coins, and currency notes. A demand deposit is a type of account from which funds may be withdrawn at any time without having to notify the institution. 


Examples of demand deposit accounts include checking accounts and savings accounts.

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

Which of the following is not the example of cash equivalents?

  1. Treasury bills

  2. Commercial papers

  3. Debtors

  4. Money market funds
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Cash equivalents are short-term, highly liquid investments. Debtors are current assets but are not considered cash equivalents because they are not readily convertible into a known amount of cash without significant risk.

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

Cash Flow Statement facilitates to determine Cash Flow from ____________ activities.

  1. operating

  2. investing

  3. financing

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A Cash Flow Statement is structured to show cash flows from three main activities: operating, investing, and financing activities.

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

Financing Activities are the activities that result in changes in the size and composition of the owner's capital and borrowings of the company.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Financing activities are activities that result in changes in the size and composition of the owners' capital and borrowings of the enterprise. e.g., cash proceeds from issue of equity shares, debentures, raising long-term loans, repayment of bank loans, etc. Cash proceeds from issuing shares (equity / preference).

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

Cash Equivalents are short-term, highly liquid investments that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is the standard accounting definition of cash equivalents as per accounting standards like AS-3 or Ind AS-7.

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

Which of the following are included in investing activities?

  1. Sale of machnery.

  2. Purchase of furniture

  3. Loans and advances to third parties.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Investing activities involve the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Sale of machinery, purchase of furniture, and loans to third parties all fall under this category.

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

Cash received from sale of goods is not an operating activity.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Some common operating activities include cash receipts from goods sold, payments to employees, taxes, and payments to suppliers.This means that the issuance of stock or bonds by a company are not counted as operating activities.