Fund Flow Statement – Corporate and Management Accounting MCQ

Going through the Fund Flow Statement – Corporate and Management Accounting CS Executive MCQ Questions with Answers you can quickly revise the concepts.

Fund Flow Statement – Corporate and Management Accounting MCQs

Question 1.
Uses of funds include a (an):
(A) Decrease in cash
(B) Increase in any liability
(C) Increase in fixed assets
(D) Tax refund
Answer:
(C) Increase in fixed assets

Question 2.
Which of the following would be included in a fund flow statement?
(A) Depreciation charges
(B) Dividends
(C) Goodwill written off
(D) Patent amortization
Answer:
(B) Dividends

Question 3.
An examination of the sources and uses of funds statement is part of:
(A) A forecasting technique
(B) A funds flow analysis
(C) A ratio analysis
(D) Calculations for preparing the balance sheet
Answer:
(B) A funds flow analysis

Question 4.
Which of the following is NOT a fund outflow for the firm?
(A) Depreciation
(B) Dividends
(C) Interest payments
(D) Taxes
Answer:
(A) Depreciation

Question 5.
Which of the following would be considered a use of funds?
(A) A decrease in accounts receivable
(B) A decrease in cash
(C) An increase in account payable
(D) An increase in cash
Answer:
(B) A decrease in cash

Question 6.
For a profitable firm, total sources of funds will always …….. total uses of funds.
(A) be equal to
(B) be greater than
(C) be less than
(D) have no consistent relationship to
Answer:
(A) be equal to

Question 7.
“Fund flow statement reveals the effects of transactions involving movement of cash”. This statement is
(A) Correct
(B) Incorrect
(C) Partially Correct
(D) Irrelevant
Answer:
(A) Correct

Question 8.
A cash flow statement is like an income statement.
(A) I agree
(B) I disagree
(C) I cannot say
(D) The statement is ambiguous
Answer:
(B) I disagree

Question 9.
Funds flow statement and cash flow statement are one and the same.
(A) True
(B) False
(C) Partly true
(D) The statement is irrelevant
Answer:
(B) False

Question 10.
Increase in the amount of bills payable results in ……..
(A) Increase in funds
(B) Decrease in funds
(C) No change in funds
(D) I cannot say
Answer:
(A) Increase in funds

Question 11.
Funds from operations is equal to
(A) Net profit plus increase in outstanding expenses
(B) Net profit plus increase in debtors
(C) Net profit plus increase in stock
(D) None of the above
Answer:
(A) Net profit plus increase in outstanding expenses

Question 12.
Non-cash transactions
(A) Form part of fund flow statement
(B) Do not form part of fund flow statement
(C) May or may not form part of fund flow statement
(D) I cannot say whether they are part of fund flow statement
Answer:
(B) Do not form part of fund flow statement

Question 13.
Fund flow statement shows the position of business as on …………. of the business period.
(A) Opening date
(B) Closing date
(C) Between opening and closing date
(D) None of the above
Answer:
(C) Between opening and closing date

Question 14.
A decrease in current liability
(A) Increases working capital
(B) Decreases working capital
(C) No effect on working capital
(D) Decreases the current ratio
Answer:
(A) Increases working capital

Question 15.
The difference between fixed assets and current assets is known as
(A) Fixed assets turnover ratio
(B) Net working capital.
(C) Gross working capital
(D) Hidden working capital
Answer:
(C) Gross working capital

Question 16.
Amortization of preliminary expenses is:
(A) Sources of funds
(B) Application funds
(C) Reduces funds from operation
(D) Neither source nor application of funds
Answer:
(D) Neither source nor application of funds

Question 17.
Cash or credit sales …….. the working capital when sales are made on profit.
(A) Increases
(B) Decreases
(C) Will not affect
(D) Cannot say anything without monetary figures
Answer:
(A) Increases

Question 18.
Cash or credit sales ………. the working capital when sales are made on loss.
(A) Increases
(B) Decreases
(C) Will not affect
(D) Cannot say anything without monetary figures
Answer:
(B) Decreases

Question 19.
Collection from debtors will the working capital
(A) Increases
(B) Decreases
(C) Will not affect
(D) Cannot say anything without monetary figures
Answer:
(C) Will not affect

Question 20.
Sale of old plant & machinery the working capital.
(A) Increases
(B) Decreases
(C) Will not affect
(D) Cannot say anything without monetary figures
Answer:
(A) Increases

Question 21.
Increase in fixed assets in cash …………. the working capital.
(A) Increases
(B) Decreases
(C) Will not affect
(D) Cannot say anything without monetary figures
Answer:
(B) Decreases

Question 22.
Net profit+Non cash expenditure =
(A) Funds from operation
(B) Use of funds
(C) Application of funds
(D) EBIT
Answer:
(A) Funds from operation

Question 23.
Income tax paid
(A) Will increase working capital
(B) Will decrease working capital
(C) Application of funds
(D) (B) & (C)
Answer:
(C) Application of funds

Question 24.
Find flow statement can very well be equated with
(A) Profit & loss account
(B) Balance sheet
(C) Statement of retained earnings
(D) None of the above
Answer:
(D) None of the above

Question 25.
Increase in amount of debtors results in:
(A) Decrease in cash
(B) Increase in cash
(C) No change in cash
(D) Decrease in working capital
Answer:
(C) No change in cash

Question 26.
All of the following are true regarding the purpose of the statement of fund flows except
(A) It is for evaluating management decisions
(B) It is for predicting future cash flows
(C) It is for reporting net income
(D) It is for determining the company’s ability to pay dividends to share-holders and interest and principle to creditors
Answer:
(C) It is for reporting net income

Question 27.
Working capital is defined as:
(A) Total assets less intangible assets
(B) Current assets less liabilities
(C) Current assets divided by current liabilities
(D) Current assets less current liabilities
Answer:
(D) Current assets less current liabilities

Question 28.
Which of the following transactions is NOT reflected in a fund flow statement?
(A) Sale of treasury stock
(B) Declaration of a stock dividend
(C) Purchase of foreign subsidiary with cash
(D) Issuance of convertible bonds
Answer:
(B) Declaration of a stock dividend

Question 29.
Conversion of convertible debenture into shares is
(A) Source of funds
(B) Application of funds
(C) Increase or decrease in working capital
(D) Neither source nor application of funds.
Answer:
(D) Neither source nor application of funds.

Question 30.
Which of the following is internal source of funds?
(A) Funds generated from operation
(B) Sales of non-current assets
(C) Existing surplus working capital
(D) All of the above
Answer:
(D) All of the above

Question 31.
……. is prepared to know the financial position of a company on a particular date.
(A) Balance sheet
(B) Trund flow statement
(C) Profit & loss account
(D) None of the above
Answer:
(A) Balance sheet

Question 32.
How many balance sheet(s) are required to prepare fund Row statement?
(A) 1
(B) 2
(C) 2 or more
(D) No balance sheet is required
Answer:
(C) 2 or more

Question 33.
…… is also called statement of sources & application of funds and statement of changes in financial position.
(A) Balance sheet
(B) Position statement
(C) Income statement
(D) Fund flow statement
Answer:
(D) Fund flow statement

Question 34.
Which of the following can be shown on the “sources side” in fund flow statement?
(A) Funds lost in operation
(B) Net increase in working capital
(C) Net decrease in working capital
(D) Redemption of debentures
Answer:
(C) Net decrease in working capital

Question 35.
Which of the following can be shown on the “Application side” in fund flow statement?
(A) Funds lost in operation .
(B) Non-trading payments
(C) Net increase in working capital
(D) All of the above
Answer:
(D) All of the above

Question 36.
While solving problem on fund flow statement, if no adjustment appears for the “provision for taxation” & “proposed dividend” then
(A) Difference between opening balance and closing balance is transferred to profit & loss adjustment account
(B) Difference between opening balance and closing balance is treated as amount paid during the year.
(C) Amount equal to opening balance will be treated as amount paid and amount equal to closing balance is treated as provision make.
(D) Any of the above
Answer:
(C) Amount equal to opening balance will be treated as amount paid and amount equal to closing balance is treated as provision make.

Question 37.
If pre-acquisition dividend is received it is credited to
(A) Profit and loss adjustment account
(B) Capital work-in-progress account
(C) Investment account
(D) Capital account
Answer:
(C) Investment account

Question 38.
If preference shares are redeemed at premium then amount debited to ………… preference share capital
(A) Face value of shares multiplied by number of shares
(B) Sale price per share multiplied by number of shares
(C) Face value minus premium of shares multiplied by number of shares
(D) None of the above
Answer:
(A) Face value of shares multiplied by number of shares

Question 39.
Any decrease in asset item represents
(A) Uses of funds
(B) Sources of funds
(C) Both (A) and (B)
(D) None of the above
Answer:
(B) Sources of funds

Question 40.
An increase in account receivables would be a ……
(A) Sources of funds
(B) Reuse of funds
(C) Application of funds
(D) Both (A) and (C)
Answer:
(A) Sources of funds

Question 41.
When closing balance of profit & loss account is starting point, which of the following item will not be added to calculate funds from operation?
(A) Pre-acquisition dividend received
(B) Provision for depreciation
(C) Interim dividend
(D) Interest on debenture
Answer:
(A) Pre-acquisition dividend received

Question 42.
Which of the following transactions would NOT be reported on a statement of fund flows?
(A) Purchase of equipment
(B) Retirement of debt prior to maturity
(C) Exchange of common shares for equipment
(D) Sale of treasury shares at a price in excess of cost
Answer:
(C) Exchange of common shares for equipment

Question 43.
Following are the balance sheet changes:
₹ 5,005 decrease in accounts receivable ₹ 12,012 decrease in notes payable ₹ 10,001 increase in accounts payable ₹ 8,950 decrease in net fixed assets A “use” of funds would be:
(A) ₹ 8,950 decrease in net fixed assets
(B) ₹ 5,005 decrease in accounts receivable
(C) ₹ 10,001 increase in accounts payable
(D) ₹ 12,012 decrease in notes payable
Answer:
(D) ₹ 12,012 decrease in notes payable

Sources of funds Application/use of funds
Decrease in current assets Increase in current liability Increase in current assets Decrease in current liability
Decrease in fixed assets Increase in fixed assets

Question 44.
Which of the following transaction shows the source of funds?
(A) ₹ 9,850 increase in inventories
(B) ₹ 5,005 decrease in accounts receivable
(C) ₹ 7,000 increase in cash
(D) ₹ 12,012 decrease in notes payable.
Answer:
(B) ₹ 5,005 decrease in accounts receivable

Sources of funds Application/use of funds
Decrease in current assets Increase in current liability Increase in current assets Decrease in current liability
Decrease in fixed assets Increase in fixed assets

Question 45.
Use the following information to calculate net fund flow:
Cash sales ₹ 1,00,000; cash from account receivable payments ₹ 2,00,000; cash dividends received ₹ 3,000; dividends paid ₹ 4,000; rent paid ₹ 5,000; and amortization expense ₹ 6,000.
(A) ₹ 2,98,000
(B) ₹ 2,94,000
(C) ₹ 3,04,000
(D) ₹ 2,90,000
Answer:
(B) ₹ 2,94,000

Question 46.
The assets of another company were purchased for ₹ 60,000 payable in fully paid shares of the company. These assets consisted of stock ₹ 22,000 and machinery ₹ 18,000 and goodwill 20,000. In addition, sundry purchases of plant were made totalling ₹ 5,650. How much amount will be shown in fund flow statement?
(A) ₹ 22,000 + 5,650 will be shown on the application side.
(B) ₹ 22,000 + 5,650 will be shown on the sources side.
(C) ₹ 22,000 will be shown on the sources side and ₹ 5,650 on the application side.
(D) ₹ 22,000 will be shown on the application side and ₹ 5,650 on the sources side.
Answer:
(C) ₹ 22,000 will be shown on the sources side and ₹ 5,650 on the application side.

Question 47.
In the books of X Ltd. balance of machinery account at the beginning of the year was ₹ 82,000 and at the end was 90,000. Balance in accumulated depreciation was ₹ 40,000 at the beginning and ₹ 44,000 at the end. New machinery was purchased for ₹ 30,000 but old Machinery costing ₹ 15,000 was sold for ₹ 5,000, accumulated depreciation was ₹ 8,000. How much amount will be shown in fund flow statement?
(A) ₹ 5,000 on the sources side and ₹ 37,000 on the application side.
(B) ₹ 5,000 on the sources side and ₹ 30,000 on the application side.
(C) ₹ 5,000 on the sources side and ₹ 25,000 on the application side.
(D) ₹ 30,000 on the sources side and ₹ 5,000 on the application side.
Answer:
(B) ₹ 5,000 on the sources side and ₹ 30,000 on the application side.
₹ 5,000 received from sale of machinery is source and ₹ 30,000 purchased is application.

Question 48.
In the books of Y Ltd. balance of share capital account at the beginning of the year was 12,50,000 and at the end was 3,00,000. During the year 12% dividend was paid in cash. How it will be disclosed in fund flow statement?
(A) ₹ 30,000 will be shown on the application side as dividend paid.
(B) ₹ 36,000 will be shown on the application side as dividend paid.
(C) ₹ 36,000 will be shown on the application side as dividend paid and ₹ 50,000 will be shown on the sources side as issue of share capital.
(D) ₹ 30,000 will be shown on the application side as dividend paid and ₹ 50,000 will be shown on the sources side as issue of share capital.
Answer:
(D) ₹ 30,000 will be shown on the application side as dividend paid and ₹ 50,000 will be shown on the sources side as issue of share capital.

Question 49.
In the books of N Ltd. balance of 5% debenture at the beginning of the year was ₹ 1,00,000 and at the end was 80,000. At the end of the year ₹ 20,000, 5% debentures were redeemed by purchase from open market @ ₹ 96. Ignoring other transaction net fund flow from transaction relating to debenture = ?
(A) Net outflow 25,000
(B) Net outflow 24,200
(C) Net outflow 20,000
(D) Net outflow 19,200
Answer:
(B) Net outflow 24,200
Redemption amount = 20,000 × 96% = 19,200 + 5,000 (interest) = 24,200.

Question 50.
In the books of N Ltd. balance of profit and loss account at the beginning of the year was ₹ 20,450 and at the end was ₹ 33,450. Additional information:
– During the year the company paid an interim dividend of ₹ 10,000 and directors have recommended a final dividend of ₹ 15,000.
– The net profit for the year (after providing for depreciation ₹ 40,000 writing off preliminary expenses ₹ 7,200 and making provision for taxation ₹ 32,000) amounted to ₹ 38,000.
– Profit on sale of fixed assets ₹ 2,000 Funds from operation = ?
(A) ₹ 1,53,200
(B) ₹ 1,15,200
(C) ₹ 1,17,200
(D) ₹ 1,05,200
Answer:
(B) ₹ 1,15,200
Fund Flow Statement – Corporate and Management Accounting MCQ 12

Question 51.
Income statement of Z Ltd. for the year ended was as follows:
Fund Flow Statement – Corporate and Management Accounting MCQ 1
(A) ₹ 91,050
(B) ₹ 1,09,050
(C) ₹ 97,450
(D) ₹ 99,300
Answer:
(B) ₹ 1,09,050
Calculation of funds from operation by shortcut method:
Fund Flow Statement – Corporate and Management Accounting MCQ 13
Important Note: While calculating funds from operation through shortcut method following logic is applied.
Cost of goods sold and operating expenses incurred in cash have to be deducted from sales. If income statement starts from gross profit then only operating expense.s incurred in cash has to deducted.
Alternatively, If you start from net profit then add the following items to get funds from operation:

  • Non-operating expenses
  • Non-cash items like depreciation or goodwill written off
  • Financial expense like lifterest.

Deduct following items :

  • Non-operating income like profit on sale of assets or investment.

Question 52.
Income statement of Z Ltd. for the year ended was as follows:
Fund Flow Statement – Corporate and Management Accounting MCQ 2
Funds from operation = ?
(A) ₹ 1,15,200
(B) ₹ 8,64,000
(C) ₹ 4,80,000
(D) ₹ 3,52,000
Answer:
(D) ₹ 3,52,000
Funds from operation = 40,32,000 – 31,68,000 – 3,84,000 – 1,28,000 = 3,52,000.

Question 53.
From the following data find out increase/decrease in working capital.
Fund Flow Statement – Corporate and Management Accounting MCQ 3
(A) Decrease in working capital ₹ 4,000.
(B) Decrease in working capital ₹ 5,000.
(C) Increase in working capital ₹ 5,000.
(D) Increase in working capital ₹ 4,000.
Answer:
(A) Decrease in working capital ₹ 4,000.
Fund Flow Statement – Corporate and Management Accounting MCQ 14
Decrease in Working Capital = 1,21.000 – 1,17,000 = 4,000

Question 54.
Income statement of Z Ltd. for the year ended was as follows:
Fund Flow Statement – Corporate and Management Accounting MCQ 4
Funds from operation = ?
(A) ₹ 3,696
(B) ₹ 3,051
(C) ₹ 3,942
(D) ₹ 4,317
Answer:
(B) ₹ 3,051
Funds from operation = 20,301 – 15,984 – 375 – 891 = 3,051

Question 55.
Income statement of Z Ltd. for the year ended was as follows:
Fund Flow Statement – Corporate and Management Accounting MCQ 5
Funds from operation = ?
(A) ₹ 5,98,500
(B) ₹ 5,43,500
(C) ₹ 9,16,000
(D) ₹ 5,41,500
Answer:
(A) ₹ 5,98,500
Funds from operation = 46,37,200 – 37,21,200 – 3,17,500 = 5,98,500

Question 56.
Income statement of P Ltd. for the year ended was as follows:
Fund Flow Statement – Corporate and Management Accounting MCQ 6
Fund Flow Statement – Corporate and Management Accounting MCQ 7
(A) ₹ 9,29,300
(B) ₹ 9,84,300
(C) ₹ 10,05,300
(D) ₹ 10,12,800
Use the following information to answer next 2 questions.
In the books of YT Ltd. balance in provision for taxation account on 1.4.2015 was ₹ 70,000 and 31.3.2016 was 1,00,000. On the same dates balance in Advance Tax Accounts was ₹ 80,000 & ₹ 1,05,000 respectively.
During the year 2015-2016, income tax for the year 2014-2015 was assessed at ₹ 76,000. A cheque of ₹ 4,000 was received along with the assessment order towards refund of income tax paid.
Answer:
(A) ₹ 9,29,300
Funds from operation = 36,40,200 – 27,10,700 = 9,29,300

Question 57.
Amount to be debited to Profit & Loss Adjustment A/c at the time preparing the fund flow statement = ?
(A) ₹ 1,06,000
(B) ₹ 1,05,000
(C) ₹ 76,000
(D) ₹ 1,01,000
Answer:
(A) ₹ 1,06,000

Question 58.
Amount of income tax paid during the year = ?
(A) ₹ 1,06,000
(B) ₹ 1,05,000
(C) ₹ 76,000
(D) ₹ 1,01,000
Use the following information to answer next 2 questions.
The capital structure of JCPL Ltd. is as
Fund Flow Statement – Corporate and Management Accounting MCQ 8
Additional Information:
Tax rate 30%
Equity share dividend paid 15%.
Market price per equity share ₹ 20.
Answer:
(B) ₹ 1,05,000

Question 59.
Dividend cover for preference shares = ?
(A) 1.1
(B) 1.65
(C) 3.46
(D) 3.64
Answer:
(D) 3.64
Fund Flow Statement – Corporate and Management Accounting MCQ 15
Fund Flow Statement – Corporate and Management Accounting MCQ 16

Question 60.
Dividend cover for equity shares = ?
(A) 1.1
(B) 1.65
(C) 3.46
(D) 3.64
Answer:
(A) 1.1
Fund Flow Statement – Corporate and Management Accounting MCQ 15
Fund Flow Statement – Corporate and Management Accounting MCQ 16

Question 61.
Earning Yield = ?
(A) 8.25%
(B) 8.52%
(C) 7.25%
(D) 7.52%
Answer:
(A) 8.25%

Question 62.
Price Earnings Ratio =
(A) 12.12
(B) 11.11
(C) 12.11
(D) 11.12
Answer:
(A) 12.12
Fund Flow Statement – Corporate and Management Accounting MCQ 15
Fund Flow Statement – Corporate and Management Accounting MCQ 16

Question 63.
Net fund flow = ?
(A) 12,000
(B) 1,02,000
(C) 2,22,000
(D) 1,52,000
Answer:
(B) 1,02,000
Fund Flow Statement – Corporate and Management Accounting MCQ 15
Fund Flow Statement – Corporate and Management Accounting MCQ 16

Question 64.
Beginning balance of Accounts Receivable was ₹ 45,000, and the ending balance was ₹ 48,000. Sales were ₹ 4,30,000. What was the net fund inflow from customer receipts?
(A) 4,27,000
(B) 4,33,000
(C) 4,75,000
(D) 3,82,000
Answer:
(A) 4,27,000
4,30,000 + 45,000 – 48,000 = 4,27,000

Question 65.
The opening balance of the Equipment account was ₹ 45,000; the ending balance was ₹ 54,000. The opening balance of Accumulated Amortization account was ₹ 24,000; the ending balance was ₹ 33,000. Equipment with a cost of ₹ 6,000 and accumulated amortization of ₹ 5,000 was sold for ₹ 1,200 cash. What was the amount of amortization expense for the year?
(A) ₹ 14,000
(B) ₹ 9,000
(C) ₹ 23,000
(D) ₹ 5,000
Answer:
(A) ₹ 14,000
Fund Flow Statement – Corporate and Management Accounting MCQ 17

Question 66.
Cash dividends of ₹ 42,500 were declared. The beginning and ending balance of the cash dividends payable account was ₹ 10,000 and ₹ 12,500, respectively. On the statement of fund flow, the cash dividend would be shown:
(A) 45,000
(B) 52,500
(C) 55,000
(D) 40,000
Answer:
(D) 40,000
Fund Flow Statement – Corporate and Management Accounting MCQ 18

Question 67.
Dec 2014: The net profit of A Ltd. amounted to ₹ 40,000.
Provision of income-tax — 33,000
Depreciation — 6,500
Preliminary expenses written off — 1,500
Bad debts — 500
Loss on sale of furniture — 2,500
Discount allowed to customers — 1,900
Discount received from trade creditors — 1,400
After considering the above information, find out the funds from operation —
(A) ₹ 84,000
(B) ₹ 83,500
(C) ₹ 85,400
(D) ₹ 85,900
Answer:
(A) ₹ 84,000

Question 68.
Dec 2014: Which of the following results into decrease in working capital —
(A) Goods sold on credit
(B) Decrease in current liabilities
(C) Decrease in current assets
(D) Increase in current assets
Answer:
(C) Decrease in current assets

Question 69.
June 2015: Which of the following does not result into inflow of funds in case of fund flow statement –
(A) Issue of equity share capital
(B) Premium received on issue of shares / debentures
(C) Sale of investments
(D) Cash received from debtors
Answer:
(D) Cash received from debtors

Question 70.
June 2015: Which of the following statement is not true –
(A) Fund flow statement is also known as statement of sources and application of funds
(B) Fund is equal to current assets minus current liabilities
(C) There is an inverse relationship be-tween current assets and working capital
(D) Fund flow statement is prepared on accrual basis
Answer:
(D) Fund flow statement is prepared on accrual basis

Question 71.
Dec 2015: Match the following:
List-I ——- List-II
p. Increase in funds — 1. Application of funds
Q. Goods purchased on credit — 2. Drain in working Capital
R. Commission — 3. Source of funds outstanding
S. Net loss — 4. No flow of funds
Select the correct answer from the options given below —
Fund Flow Statement – Corporate and Management Accounting MCQ 9
Answer:
(D)

Question 72.
Dec 2015:
Assertion (A):
Funds are not related to working capital.
Reason (R):
Flow of funds takes place whenever there is change in the funds.
Select the correct answer from the following —
(A) Both A and R are true and R is the correct explanation of A
(B) Both A and R are true, but R is not the correct explanation of A
(C) A is true, but R is false
(D) A is false, but R is true
Answer:
(D) A is false, but R is true

Question 73.
June 2016: If provision for taxation is treated as a current liability, then payment of tax is —
(A) An application of funds
(B) A source of funds
(C) No flow of funds
(D) None of the above
Answer:
(C) No flow of funds

Question 74.
June 2016: A company reported current year profit as ₹ 70,000 after the following adjustments:
Loss on sale of equipment :₹ 9,000
Premium on debenture redemption :₹ 1,500
Tax provision : ₹ 22,000
Dividend income : ₹ 4,000
Profit on revaluation of fixed asset : ₹ 2,500
The amount of fund from operations will be —
(A) ₹ 96,000
(B) ₹ 93,000
(C) ₹ 78,000
(D) ₹ 61,000
Answer:
(A) ₹ 96,000

Question 75.
June 2016: Which one of the following is a non-current item —
(A) Securities premium
(B) Outstanding wages
(C) Trade payables
(D) Bank balance
Answer:
(A) Securities premium

Question 76.
June 2016: Balance of investment account is ₹ 20,000 on 31st March, 2014 and ₹ 30,000 on 31st March, 2015. As per additional information, dividend received ₹ 3,000 includes ₹ 1,000 from pre-acquisition profit which is credited to investment account. The amount of investment purchased/sold during the year 2014-2015 is —
(A) ₹ 13,000 purchased
(B) ₹ 11,000 purchased
(C) ₹ 9,000 purchased
(D) ₹ 9,000 sold
Answer:
(B) ₹ 11,000 purchased

Question 77.
Dec 2016: A company reported current year profit of ₹ 12,00,000 which includes the following:
Profit on sale of equipment : ₹ 2,00,000
Share issue expenses : ₹ 1,50,000
Dividend income : ₹ 80,000
Tax : ₹ 90,000
Profit on revaluation of : ₹ 2,50,000 fixed assets
The amount of funds from operation will be —
(A) ₹ 11,90,000
(B) ₹ 8,20,000
(C) ₹ 10,70,000
(D) ₹ 10,50,000
Note: MCQ is wrongly drafted. For further clarification see the hints.

Question 78.
June 2017: Which of the following is not applied in Management Accounting?
(A) Comparative Statement
(B) Managerial reporting
(C) Double entry system
(D) Operation research
Answer:
(D) Operation research

Question 79.
June 2017: Management Accounting aims at:
(A) Presentation of accounting information
(B) Assist in long-term planning
(C) Assist in day to day activities
(D) All of the above
Answer:
(D) All of the above

Question 80.
June 2017:
Assertion (A):
In management accounting firm decisions on pricing policy can be taken.
Reason (R):
As marginal cost per unit is constant from period to period within a short span of time.
Codes:
(A) A is true, but R is false
(B) A is false, but R is true
(C) Both A & R are true and R is the correct explanation of A
(D) Both A & R are true but R is not the correct explanation of A
Answer:
(C) Both A & R are true and R is the correct explanation of A

Question 81.
June 2017: Net Profit + Non-Cash expenses = ………
(A) Gross Profit
(B) Profit after tax
(C) Fund from operation
(D) Distributable profit
Answer:
(C) Fund from operation

Question 82.
June 2017: Match the following:
List I — List II
(a) Cash flow statements — (1) Inflow of fund
(b) Inflow of cash — (2) Short-term financial planning
(c) Investment (maturity period 3 months) — (3) Financing activity
(d) Payment of dividend — (4) Cash equivalent
Fund Flow Statement – Corporate and Management Accounting MCQ 10
Answer:
(B)

Question 83.
June 2017: Match the following:
List I — List II
(a) Increase in fund — (1) Application of funds
(b) Goods purchased on credit — (2) Drain in working capital
(c) Commission outstanding — (3) Source of fund
(d) Net loss — (4) No flow of funds
Fund Flow Statement – Corporate and Management Accounting MCQ 11
Answer:
(C)

Question 84.
Dec2017: Management accounting and cost accounting are to each other.
(A) Complementary
(B) Supplementary
(C) Opposite
(D) Independent
Answer:
(B) Supplementary

Question 85.
Dec 2017: Management accounting works on output of:
(A) Financial accounting
(B) Cost Accounting
(C) Statistics
(D) All of the above
Answer:
(D) All of the above

Question 86.
Dec 2017: In Management Accounting, analysis of accounting data are carried out with the help of:
(A) Tools and Techniques
(B) Statutory Forms
(C) Auditors
(D) Legal provisions
Answer:
(A) Tools and Techniques

Question 87.
Dec 2017 & Dec 2018: In fund flow statement, flow of fund will occur when a transaction is happened between:
(A) Current Assets & Current Liabilities
(B) Non-current Assets & Non-current Liabilities
(C) Current Assets & Non-current Assets
(D) All of the above
Answer:
(C) Current Assets & Non-current Assets

Question 88.
Dec 2017: While analyzing the opening and closing balance sheet of a company the following are observed:
Total increase in current assets ₹ 20,000 Total increase in current liabilities ₹ 80,000 Total decrease in current assets ₹ 1,30,000 Total decrease in current liabilities ₹ 30,000 Net change in working capital is:
(A) No change in working capital
(B) Net increase in working capital ₹ 1,60,000
(C) Net decrease in working capital ₹ 1,60,000
(D) None of the above
Answer:
(B) Net increase in working capital ₹ 1,60,000

Question 89.
June 2018:
Assertion (A):
Management accounting can be defined as processing and presenting of accounting, cost accounting and other economic data.
Reason (R):
It is analysis of all the transactions, financial and physical, to enable effective comparison to be made between the forecasts and actual performance.
Select the correct answer from the options given below:
(A) Both A and R are true and R is the correct explanation of A
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true but R is false
(D) A is false but R is true
Answer:
(B) Both A and R are true but R is not the correct explanation of A

Question 90.
June 2018: Which of the following does not come under the scope of management accounting?
(A) Formation, installation and operation of accounting, cost accounting, tax accounting and information system.
(B) The compilation and preservation of vital data for management planning.
(C) Providing and installing an effective system of feedback.
(D) Publishing the financial statements and get them audited by statutory auditor
Answer:
(D) Publishing the financial statements and get them audited by statutory auditor

Question 91.
June 2019: Which of the following statement is correct?
(A) A decrease in current liability during the year results in increase in working capital.
(B) Only non cash expenses are added to net profit to find out funds from operations.
(C) Conversion of debentures into equity shares appears in fund flow statement.
(D) Collection of debtors is a source of fund.
Answer:
(A) A decrease in current liability during the year results in increase in working capital.

Question 92.
June 2019: Depreciation provided during the year: Furniture ₹ 15,000, Building ₹ 14,000. The statement of P & L for the year:
Opening balance ₹ 38,500 Add: Profit for the year ₹ 40,300, Less: Goodwill written off ₹ 15,000, Closing balance ₹ 63,800.
What will be the amount of funds from operation?
(A) ₹ 69,300
(B) ₹ 54,300
(C) ₹ 78,800
(D) ₹ 25,300
Answer:
(A) ₹ 69,300
63,800 + 15,000 + 15,000 + 14,000 – 38,500 = 69,300