Rules of Funds Flow Statement - MCQs

Rules of Funds Flow Statement - MCQs

1. Which of the following statement is true about Funds Flow Statement?

A) It highlights change in funds of a firm at different point
B) It highlights change in funds of different firms at a single point
C) It highlights change in funds of different firms at different point
D) It doesn’t highlights change in funds

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

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2. In the context of Funds Flow Analysis, the word “funds” is used to define

a) Net Working capital
b) Total current assets-Total current liabilities
c) Both a and b
d) None of the above.

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3. Which of the following is/are examples of Funds Flow Statement?

A) Collection of debtors
B) Shares issued for cash
C) Shares issued against the purchase of machinery
D) Shares issued for property

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

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4. Which of the following statement/s are true about movement of funds?

A) Funds flow in a transaction between current assets and fixed assets.
B) Funds flow in a transaction between current asset and capital
C) Funds flow in a transaction between fixed assets and current liabilities
D) Funds flow in a transaction between current liabilities and capital

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

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5. Which of the following transactions will result in inflow of funds?

A) Issue of debentures
B) Conversion of debentures into equity shares
C) Redemption of long term loan
D) Creation of General Reserve

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

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6. During the year, a business was bought by issue of Rs 25,000 debentures and Rs 25,000 shares. The business bought had machine worth Rs 20,000, Debtors Rs 15,000, Stock Rs 5,000 and Creditors Rs 5,000. Determine the effect of this transaction on flow of funds.

a) Net outflow of Rs 15,000
b) Net inflow of Rs 15,000
c) Neither inflow nor outflow
d) None of the above

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7. Which of the following are current assets?

A) Fixed investments
B) Trade Payables
C) Short-term loans and advances
D) Furniture

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

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8. Which of the following are Non-current assets?

a) Land, Building and plant
b) Leasehold property
c) Computer software
d) All of the above

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9. Bond, debentures and term loans falls under:

a) Current assets
b) Non-current assets
c) Non-current liabilities
d) Current liabilities

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10. Funds flow statements are prepared so as to

a) To identify the changes in working capital
b) To identify reasons behind change in working capital
c) To know the item-wise outflow of funds during given period
d) All of the above

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11. Funds Flow Statement holds significance for

a) Shareholders
b) Financiers
c) Government
d) All of the above

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