Tag: meaning, merits and demerits of cash flow statement

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Questions Related to meaning, merits and demerits of cash flow statement

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Sum of discounted cash flows is best defined as _____________.

  1. technical equity

  2. defined future value

  3. project net present value

  4. equity net present value
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The sum of discounted cash flows for a project, minus the initial investment, is the definition of the Net Present Value (NPV).

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Cash Flow Statement explains the reason on surplus or deficit of cash.

  1. True

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

A Cash Flow Statement provides a detailed breakdown of the sources and uses of cash, explaining why the cash balance increased or decreased over a period.

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Cash Management and Insurance are chief function of the ____________.

  1. Tax Manager

  2. Controller

  3. Treasurer

  4. Accountant

  5. Finance Manager
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The treasurer of an organization deals with the liquid assets of the firm and his responsibilities include cash management and insurance of assets.

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Cash and Cash Equivalent includes _____________________.

  1. Cash on hand and bank balance.

  2. Marketable Securities.

  3. Short-term investments.

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

Cash and cash equivalents include highly liquid assets such as cash on hand, bank balances, marketable securities, and short-term investments that can be converted to cash quickly.

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

The financial ratio (the best single predictor) that is used in the Beavers Model to predict the failure of a company is the _____________.

  1. Debt-equity ratio

  2. Cash flow to total debt ratio

  3. Price earnings ratio

  4. Return on investment

  5. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Beaver's Model for bankruptcy prediction identified the cash flow to total debt ratio as the most significant single predictor of corporate failure.

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Cash outflows are costs of project and are represented by ____________.

  1. negative numbers

  2. positive numbers

  3. hurdle number

  4. relative number
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In financial modeling, cash outflows represent money leaving the project and are denoted by negative numbers to distinguish them from cash inflows.

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Which of the following is not a cash inflow?

  1. Purchase of fixed asset

  2. Sale of fixed asset

  3. Issue of debentures

  4. Cash from business operations
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Purchasing a fixed asset is a cash outflow because it requires spending cash to acquire an asset. The other options involve receiving cash.

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

Which Accounting Standard is applicable for preparation of Cash Flow Statement?

  1. Accounting Standard - 6

  2. Accounting Standard - 3

  3. Accounting Standard - 2

  4. Accounting Standard - 13
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Accounting Standard 3 (AS-3) is the standard specifically mandated for the preparation and presentation of Cash Flow Statements. AS-6 relates to depreciation, AS-2 to inventory valuation, and AS-13 to accounting for investments.

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

Net investment in operating capital is Rs 5000 and net operating profit after taxes is Rs 8000 then free cash flow would be __________.

  1. Rs 13, 000.00
    • Rs 3, 000.00

  3. Rs 3, 000.00
    • Rs 13, 000.00
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Free Cash Flow (FCF) is calculated as Net Operating Profit After Taxes (NOPAT) minus Net Investment in Operating Capital. Here, 8000 - 5000 = 3000.