Funds Flow Statement

A fund flow can be described as the one which helps in revealing the anomalies or the changes in the company’s financial position between two balance sheets. A fund flow statement can be helpful for depicting the outflow as well as the inflow of funds. Further, a fund flow statement can also be helpful in the identification of variations in the status of an organization’s working capital. 

A brief introduction is given just to help you understand better the funds’ flow statement. Now, here are some MCQ questions given on the topic ‘funds flow statement’ along with the correct answer for even better learning purposes. 

Funds Flow Statement MCQs

Question 1 – Out of the following four options which option can be the most suitable for explaining the purpose of the funds flow statement

1. 1. Funds flow statement help in measuring the organization’s specific aspect of performance of the business over some particular duration of time.
   2. The funds flow statement helps in showing the flow of cash and equivalents of cash in the business whilst operating the business in a particular span of time.
   3. Funds flow statements help the organization in managing their inflow as well as the outflow of cash.
   4. Funds flow statement help in reporting the variations in the industry’s net-working money from the operations during a single period of time. 

Answer 1 – D)

Question 2 – What all can be a part of liabilities from the following options

1. 1. Receivables
   2. Payables
   3. Inventory
   4. None of the above

Answer 2 – B)

Question 3 – Out of the following four options which is the most suitable example with respect to the current assets

1. 1. Cash and inventory
   2. Receivables and payables
   3. Payables and inventory
   4. Cash, receivables and inventory

Answer 3 – D) 

Question 4 – Out of the following options, what can be called the most suitable basis for a funds flow statement

1. 1. The core base of the funds flow statement can be called the larger concept that includes the working capital. 
   2. The basis of funds flow statement can be called a concept that is barrow in nature, that is, the concept regarding the only particularly one of the components of working capital
   3. There cannot be any particular basis found for the funds flow statement
   4. The funds flow statement is simply based on a very narrow concept

Answer 4 – A)

Question 5 – Funds flow statement can have a significant role to play in the company. Out of the following four options, select the option which seems to be the most relevant with regards to the usage of the funds flow statement

1. 1. The funds’ flow statement helps in understanding the short-term phenomena with regard to the business
   2. Funds flow statement helps in understanding the long-term phenomena with regard to the business
   3. The funds flow statement helps in evaluating the long-term economic plan
   4. The funds’ flow statement helps in learning about the short-term process that impacts the business’s liquidity

Answer 5 – C)

Question 6 – What can be the most adequate end result found from the funds flow statement

1. 1. In the end, the funds’ flow statement helps in showing the source of variations in the net-working wealth
   2. In the end, the funds’ flow statement helps in showing the sources for variation in cash
   3. In the end, the funds’ flow statement helps in learning about the company’s vision and mission
   4. None of the above

Answer 6 – A) 

Question 7 – Out of the following options, choose the correct examples for liabilities with regards to the funds’ flow statement

1. 1. Lenders, fixed assets, inventory, receivables and vendors
   2. Employees, vendors, cash equivalents as well as cash and fixed assets
   3. Inventory, fixed assets, customers and lenders
   4. Customers, lenders, employees and vendors

Answer 7 – D)

Question 8 – Out of the following options, what can be called the sources of funds

1. 1. Sales of assets, dividends and payment of tax
   2. Long term loans, funds from operations and the sale of an asset 
   3. Repayment of long-term loans and sale of an asset
   4. Buying of fixed assets, sale of an asset and repayment of long-term goals

Answer 8 – B)

Question 9 – Out of the following options, which can be called the suitable options for a better understanding of the advantages of a fund flow statement

1. 1. Funds flow statement can be used for showing the financial position
   2. Funds flow statement can be helpful in indicating the addition of share capital
   3. The funds flow statement helps in revealing the loss or the profit of the operation
   4. All of the above

Answer 9 – D)

Question 10 – Select the correct formula for calculation of the working capital from the following four options

1. 1. Working capital = Current assets – current liabilities
   2. Working capital = current assets + current liabilities
   3. Working capital = Current assets/current liabilities
   4. Working capital = Current liabilities – Current assets

Answer 10 – A) 

Question 11 – Out of the following statements, select the correct disadvantage of the funds’ flow statement

1. 1. A funds flow statement can be useful for the formation of an operative dividend policy 
   2. Funds flow statement can be useful for acting as a financial guide
   3. The funds’ flow statement does not have the ability to depict the parameters given in the income statement or the balance sheet
   4. Funds flow statement can be helpful for determining the company’s creditworthiness 

Answer 11 – C) 

Question 12 – Which of the following statements help in describing the funds flow analysis in the most suitable manner

1. 1. Funds flow analysis can be a comparison between the balance sheet’s varying facets 
   2. Funds flow analysis can be used for determining the employee engagement in their work
   3. Funds flow analysis can help in understanding the vision and mission of the company
   4. Funds flow analysis can be useful for understanding the goals of the company

Answer 12 – A) 

Question 13 – Which of the following statements are true with respect to the cash flow and fund flow of a company

1. An organization’s fund flow, as well as cash flow statement, can help in reflecting two varying variables at a particular time duration.
2. An organization’s fund flow, as well as cash flow statements, cannot help in reflecting the two varying variables at a particular time duration. 
3. Both fund flow, as well as cash flow, can be helpful for providing the market as well as the investors with a snapshot regarding the performance of the organization in a periodic manner. 
4. Neither fund flow nor cash flow can be helpful for providing the market as well as the investors a snapshot regarding the performance of the organization in a periodic manner.

1. 1. Statements I and II are true.
   2. Statements I and III are true.
   3. Statements I and IV are true.
   4. None of the above statements is true.

Answer 13 – B)

Question 14 – For understanding the cash flow of a company for the purposes of investment, what would be the probable first preference of the company from the following options

1. 1. Cash flow statement
   2. Fund flow statement
   3. Neither cash flow statement nor fund flow statement
   4. Balance sheet

Answer 14 – A)

Question 15 – Which kind of statement can be called the previous form of the cash flow statement. 

1. 1. Balance sheet
   2. Financial statement
   3. Fund flow statement
   4. Income statement

Answer 15 – C)

Question 16 – What can be called the components of a fund flow statement from the following options

1. 1. Sources of funds
   2. Application of funds
   3. Both (A) and (B)
   4. Neither (A) nor (B)

Answer 16 – C)

Question 17 – Out of the following statements, which statement does not imply the item that has to be shown under the application of fund flow

1. 1. Purchase of investments as well as fixed assets
   2. Payment of tax and dividend
   3. Reduction in the working capital
   4. Growth in the working capital

Answer 17 – C) 

Question 18 – From the following options, which are the items that can be shown as the sources of funds

1. 1. Debentures for cash as well as issues of shares
   2. Loans that are long-term
   3. Funds that are obtained from operations
   4. All of the above points

Answer 18 – D) 

Question 19 – Which of the following statements is with regards to the disadvantages of fund flow statements

1. 1. Fund flow statements help in explaining the organization’s financial strengths
   2. Fund flow statements can be helpful for fund managers to analyze the fund flow
   3. Fund flow statements can be helpful for fund managers in explaining the liquidity of the organization and strain the working capital
   4. None of the above

Answer 19 – D) 

Question 20 – What are the types of assets that can be there in businesses

1. 1. Fixed assets
   2. Current assets
   3. Both (A) and (B)
   4. Neither (A) nor (B)

Answer 20 – C)