Unit- iv
Statement of changes in financial position A. fund flow statement
Exercises :
I. Objective type Questions :
1. State whether the following statements are true or false
(i) Fund means the differnece between Fixed Assets and Current Assets. (False)
(ii) Fund Flow Statement can substitute Income Statement. (False)
(iii) Flow of fund means changes in working capital.(True)
(iv) Depreciation is a source of fund (False)
(v) Increase in current liabilities means a decrease in working capital.(True)
(vi) Increase in current assets means an increase in working capital.(True)
(vii) There will be a flow of fund if a transaction affects non fund accounts only.(False)
(viii) There will be a flow of fund if a transaction affects non fund accounts only.(False)
(ix) Net loss means a decrease in working capital(True)
(x) Flow of fund arises when a transaction affects two current items.(False)
2. Fill in the blanks with suitable words:
(i) The word fund means the difference between _______ And _________ (current assets, current liabilities).
(ii) Purchase of machinery in cash means a __________ inworking capital. (decrease)
(iii) Issue of share capital means an ___________ in working capital. (increase)
(iv) A transaction affecting one current account and one non-current accounts results in a _______ . (flow of fund)
(v) Net profies results in an _________ . (inflow of fund).
(vi) Decrease in working capital results in an _______ of fund . (inflow ).
(vii) Decrease in current liabilities results in an __________ in working capital (Increase)
3. Choose the correct alternative:
(i) Depreciation on Plant and Machinery is:
(a) A source of find
(b) An application of fund
(c) None of the above
Ans . (c)
(ii) Which of the following items is a non-current item:
(a) Securities Premium Reserve;
(b) Sundry Creditors
(c) Bank balance
Ans.(a)
(iii) Which of the following items results into an application of fund?
(a) Payment of Dividend
(b) Issue of Share Capital and
(c) Sale of Plant
(iv) Which of the following transactions affects working capital.
(a) Payment of creditors
(b) Issue of debenture for cash, and
(c) Issue of Bonus Shares
Ans. (b)
(v)Which of the following transactions affects the flow of fund?
(a) Conversion of debentures into shares
(b) Conversion of creditors into Bills payable; and
(c) Sale of Furniture for cash.
Ans. (c)
IL Short answer type Questions:
1. What is fund
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2. What is flow of fund?
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3. What is a Fund Flow Statement?
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4. Give two importances of fund flow statement
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5. Give two limitations of fund flow statement.
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6. What are fund items?
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7. What are non-fund items?
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8.Give two points of differece between a Fund Flow Statement and a Balance Sheet ?
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9. Give two points of differences between a Fund Flow Statement and an Income Statement ?
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III. Long answer type Questions:
1. What is fund flow statement? Examine its use and significance to the management.
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2. Explain the meaning, importance and objectives of a Fund Flow Statement.
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3. Discuss the procedure of preparing a Fund Flow Statment.
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4. Retained earnings and allowance for depreciation are the two primary sources of find Comment.
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5. What are the sources and applications of funds?
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6. A fund flow statement is a better substitute for an income statement." Discuss
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7. What are the causes for a change in working capital? Explain.
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8. Distinguish between a Fund Flow Statement and a Balance Sheet.
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9. How is a Schedule of Changes in Working Capital calculated?
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10. How are funds from operation calculated.
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11. A Balance Sheet is static but a Fund Flow Statement is dynamic.' Explain.
Ans.
Type by- Pinku moni bora.
