S.Y B.COM
SEMESTER - IV
CORPORATE ACCOUNTING
(CA)
MCQS
UNIT - II
CHAPTER 2 : FUND FLOW STATEMENT
1) Funds Flow statement is also known as
(A) Statement of Funds Flow
(B) Statement of Sources and Application of Funds
(C) Statement of Sources and Users of Funds
(D) All of the above
2) As per accounting standard AS3, provision for taxation should be treated as
(A) As a current liability
(B) As an appropriation of profits
(C) Either A or B
(D) None of the above
3) Provision of taxation is treated as
(A) As a current liability
(B) As an appropriation of profits
(C) Either A or B
(D) None of the above
4) Which of the following are treated as long term investments ?
(A) Non-current investments
(B) Trade investments
(C) Sinking fund investments
(D) All of the above
5) Which of the following are applications of funds ?
(A) payment of dividend on share capital
(B) payment of tax
(C) Increase in working capital
(D) All of the above
6) Which of the following are sources of funds ?
(i) Issue of bonus shares
(ii) Issue of shares against the purchase of fixed assets
(iii) Conversion of debentures into shares
(iv) Conversion of loans into shares
(A) A and D
(B) A and C
(C) A, B, C and D
(D) None of the above
7) Which of the following statement is true ?
(i) lf the amount of goodwill increase during current year, the difference is treated as purchase of goodwill.
(ii) If the amount of goodwill decrease during current year, it will treated as written off.
(A) Only B
(B) Only A
(C) Both A and B
(D) None of the above
8) lf reserve for bad and doubtful debts is mentioned in the question of Funds Flow Statement preparation, it can be shown as
(A) In the schedule by deducting from total debtors under current assets
(B) In the schedule separately under the heading of capital liabilities
(C) Both A and B
(D) None of the above
9) Which of the following rules stands true while preparation of Schedule of changes in working capital?
(i) An increase in current assets increase working capital
(ii) An increase in current assets decrease working capital
(iii) An increase in Current liabilities decrease working capital
(iv) An increase in current liabilities increase working capital
(A) (ii) and (iv)
(B) (i) and (iv)
(C) (i) and (ii)
(D) (I), (ii), (iii) and (iv)
10) Funds Flow Statement is prepared on the basis of data of P & L statement and two consecutive balance sheets.
(A) False
(B) True
(C) Value delivery
(D) None of the above
11) Which statement is prepared in the process of funds flow analysis?
(A) Schedule of changes in working capital
(B) Funds flow statement
(C) Both And B
(D) None of the above
12) Funds flow statement holds significance for
(A) shareholders
(B) Financers
(C) Government
(D) All of the above
13) 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
14) Bond, debentures and term loans fall under:
(A) Current assets
(B) Non-current assets
(C) Non-current liabilities
(D) Current liabilities
15) Which of the following are Non-current assets ?
(A) Land, Building and Plant
(B) Leasehold property
(C) Computer software
(D) All of the above
16) Which of the following are current assets ?
(i) Fixed investments
(ii) Trade payables
(iii) Short-term loans and advances
(iv) Furniture
(A) Only A
(B) Only B
(C) Only C
(D) A, B, C and D
17) Which of the following transactions will result in inflow of funds?
(i) lssue of debentures
(i) Conversion of debentures into equity shares
(iii) Redemption of long term loan
(iv) Creation of General Reserve
(A) Only A
(B) Only D
(C) A and D
(D) A, B, C and D
18) Which of the following statements are true about movement of funds ?
(i) Funds flow in a transaction between current assets and fixed assets
(ii) Funds flow in a transaction between current asset and capital
(iii) Funds flow in a transaction between fixed assets and current liabilities
(iv) 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
19) Which of the following are examples of Funds Flow Statement?
(i) Collection of debtors
(ii) Shares issued for cash
(iii) Shares issued against the purchase of machinery
(iv) Shares issued for property
(A) (i) and (ii)
(B) (i) and (iii)
(C) (i) and (iv)
(D) (i) (ii) (iii) and (iv)
20) 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
21) Which of the following statement is true about Funds Flow Statement ?
(i) It highlights change in funds of a firm at different point
(ii) It highlights change in funds of different firm at a single point
(iii) It highlights change in funds of different fims at different point
(iv) It doesn't highlights change in funds
(A) Only A
(B) Only B
(C) Only D
(D) A, B, C and D
22) Which statement is prepared in the process of funds flow analysis?
(A) Schedule of changes in working capital
(B) Funds flow statement
(C) Both A and B
(D) None of the above
23) Funds Flow statement is prepared on the basis of data of P&L statement and two consecutive balance sheets
(A) True
(B) False
(C) Value delivery
(D) None of the above
24) Which of the following rules stands true while preparation of schedule of changes in working capital?
(i) An increase in current increase working capital
(ii) An increase in current assets decreases working capital
(ii) An increase in current liabilities decreases working capital
(iv) An increase in current liabilities increases working capital
(A) (i) and (iii)
(B) (i) and (iv)
(C) (ii) and (iv)
(D) (i) (ii) (iii) and (iv)
25) If reserve for bad and doubtful debts is mentioned in the question of Funds flow statement preparation, it can be shown as
(A) In the schedule by deducting from total debtors under current assets
(B) In the schedule separately under the heading of capital liabilities
(C) Both A and B
(D) None of the above
26) Funds flow statement is also known as
(A) Statement of funds flow
(B) Statement of sources and Application of funds
(C) Statement of sources and uses of funds
(D) All of the above
27) Which of the following are sources of funds?
(i) Issue of bonus shares
(ii) Issue of shares against the purchase of fixed assets
(iii) Conversion of debentures into shares
(iv) Conversion of loans into shares
(A) (i) (ii) (iii) and (iv)
(B) (i) and (iv)
(C) (i) and (iii)
(D) None of the above
28) Given Net profit for the year Rs.2,50,000 transferred to general reserves Rs.40,000 and old machinery bought for Rs.50,000 was sold for Rs.20,000. Calculate funds from operations.
(A) Rs.2,90,000
(B) Rs.3,00,000
(C) Rs.2,20,000
(D) Rs.2,80,000
29) The opening and closing balance of general reserves are Rs.10,000 and Rs. 9,000, respectively. It is stated in addition information that a loss of Rs.1000 has been written off in general reserves. In such a case, decline in reverse and loss on investment will be adjusted in P & L account.
(A) True
(B) False
30) The balance of fixed assets of Y Ltd. at cost at the end of 2017 and 2018 were Rs.5,70,800 and Rs.6,15,300. During the year 2018 a machinery costing Rs.60,000 was sold. Determine the purchase of fixed assets.
(A) Rs.1,64,500
(B) Rs.1,40,500
(C) Rs.1,04,500
(D) None of the above
31) The Balance sheet of Ram at end of 2017 and 2018 disclose investment in shares of Rs. 2000 and Rs. 3000, respectively. Rs.100 as pre-acquisition dividend has been credited to investments account. Determine purchase of investments.
(A) Rs.5000
(B) Rs.1000
(C) Rs.1,100
(D) None of the above
32) The balance of property at cost has been Rs.20,000 and Rs.17,000 in 2017 and 2018 respectively. The profit on sale of property of Rs.2000 is credited to Capital Reserves Account. New property costing Rs.5000 bought in 2018. Determine sale of proceeds from land.
(A) Rs.3000
(B) Rs.15,000
(C) Rs.10,000
(D) Rs.7000
33) In the balance sheet of Praveen for 2017 and 2018, 4% debentures are Rs.5,00,000 and RS.4,00,000, respectively. Profit on redemption of debentures in 2017 is nil while in 2018 is Rs.4,000. What is the amount of redemption for the purpose of funds flow statement ?
(A) Rs.96,000
(B) Rs.1,04,000
(C) Rs.9,00,000
(D) Rs.9,04,000
34) Debentures are Rs.2,50,000 and Rs.3,50,000 in the balance sheet of 2017 and 2018. 1000 of the debentures of Rs.100 each were issued at per in 2018 of which 400 debentures were issued to a supplier for the purchase of a machine. Determine amount of issue for debentures for the purpose of funds flow statement.
(A) Rs.40,000
(B) Rs.10,000
(C) Rs.60,000
(D) None of the above
35) The share capital of A Ltd. stood at Rs.20,00,000 in 2017 and at Rs.26 lac in 2018. As per records, the company bought asset of another company for Rs.6 lac payable in fully paid shares. These assets included Goodwill Rs.2,00,000 Machinery Rs.1,83,600 and Stock Rs.2,16,400. What is the fund from issue of shares?
(A) Rs.2,16,400
(B) Rs.2,15,000
(C) Rs.2,00,000
(D) None of the above
36) During the year, a business was bought by issue of Rs.25,000 debentures and Rs.25,000 shares, The business bought nad 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
37) Given net profit for the year Rs.2,50,000 Transferred to general reserves Rs.40,000 and old machinery bought for Rs.50,000 was sold for Rs.20,000. Calculate funds from operations.
(A) Rs.2,80,000
(B) Rs.2,20,000
(C) Rs.2,90,000
(D) Rs.3,00,000
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