Tag: budgeting

Questions Related to budgeting

____________ shows the details of cash generating and utilization activities of a company during a given period of time.

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

  1. Cash flow statement

  2. Profit and Loss A/c

  3. Balance sheet

  4. Segment reports

Show answer
Correct Option: A
Explanation:

Cash flow statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities. It shows the details of cash generating and utilization activities of a company during a given period of time. 

The difference between cash flow statement and cash budget is/are __________________.

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

  1. Cash flow statement shows the movement of cash whereas cash budget portrays no cash movement.

  2. Cash flow statement is a part of cash budget

  3. Cash budget shows the cash movement of the future period in contrast to cash flow statement where it displays the cash movement of the past period.

  4. All of the above

  5. Both (B) and (C) above

Show answer
Correct Option: C
Explanation:

Cash flow statements analyzes cash transactions which have already occured whereas cash budget shows the cash movement of the future period.

Cash flows include _______________.

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

  1. Cash receipts only

  2. Cash payments only

  3. both (A) and (B)

  4. None of these

Show answer
Correct Option: C

Cash received from debtors _______________.

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

  1. Sources of funds

  2. Sources of cash

  3. Application of funds

  4. No flow of fund

Show answer
Correct Option: D
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.

As per accounting standard $AS-3$, the revised cash flow statement is prepared with cash inflow from.

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

  1. Operating activities

  2. Investing activities

  3. Financing activities

  4. None of these

Show answer
Correct Option: D

_______ shows the success or failure of a business. select the most Appropriate.

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

  1. Cash flow statement appropriate answer

  2. Retained earning statement

  3. Income statement

  4. Balance sheet

Show answer
Correct Option: A

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

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

  1. Present value

  2. Real cash flow

  3. Real cash flow + present value

  4. Real cash flow present value

Show answer
Correct Option: B
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.

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

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

  1. Money Discount Rate

  2. Inflation Rate

  3. Real Discount Rate

  4. Risk free rate of interest

Show answer
Correct Option: C