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47 Qna With Answers

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74 views3 pages

47 Qna With Answers

Uploaded by

abdullahmaruf312
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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1. What is Cash Equivalent?

Short-term, liquid investments with minimal risk.

2. What is Cash Flow Statement?


Statement showing cash inflows and outflows.

3. Give any two examples of Cash Equivalent.


Treasury bills, commercial papers.

4. How would you record the effect of sale of marketable securities?


Inflow in investing activities.

5. What is the treatment of Bank Overdraft in CFS?


Financing activity unless integral to cash management.

6. If Cash is deposited into bank, what will be the effect on Cash Flow?
No effect; internal transfer.

7. Give any two items of inflow/outflow from operating/investing/financing activities.


- Operating: Cash from customers, payment to suppliers.
- Investing: Sale of assets, purchase of investments.
- Financing: Loans received, dividends paid.

8. What do you mean by operating/investing/financing activity?


- Operating: Core business activities.
- Investing: Asset transactions.
- Financing: Capital-related activities.

9. Give an example of operating/investing/financing activity.


- Operating: Payment of wages.
- Investing: Sale of machinery.
- Financing: Issuance of shares.

10. Classify 'purchase of land'.


Investing activity.

11. What do you mean by Extra-Ordinary Item in Cash Flow Statement?


Rare, non-recurring cash flow items.

12. Give an example of Extra Ordinary Item of Operating Activity/Investing Activity.


- Operating: Insurance claim.
- Investing: Sale of discontinued operations.

13. What is the treatment of Extra Ordinary Item in different cases?


Disclose under relevant activity with explanation.

14. For which company Rent Received is Investing Activity and for which company it is an Operating Activity?
- Investing: Non-real estate companies.
- Operating: Real estate companies.

15. What is the treatment of increase in accounts receivable in CFS?


Deduct from operating activities.

16. Can there be inflow in operating activity but outflow in investing/financing activity?
Yes, due to activity nature.

17. What will be the treatment of increase in Patents in Cash Flow Statement?
Outflow in investing activities.
18. State a transaction in which one part is investing and the remaining part is financing.
Machinery purchase with loan.

19. How would you treat Issue of Bonus Shares in Cash Flow Statement?
Non-cash; disclose in notes.

20. What is the treatment of rent received in cash flow statement?


- Operating: Real estate companies.
- Investing: Other businesses.

21. What is the treatment of Proposed Dividend in Cash Flow Statement?


Outflow under financing when paid.

22. How interest paid and interest received is treated in cash flow statement?
- Paid: Financing/operating.
- Received: Investing/operating.

23. Under what major subheading will the following items be placed in the B/S Of a company as per Schedule III, Part-I of the
Companies Act, 2013?
- Capital Reserve: Reserves & Surplus.
- Bonds: Non-current liabilities.

24. What is the difference between prepaid expense and preliminary expenses?
- Prepaid: Advance payment.
- Preliminary: Formation expenses.

25. What is the difference between fictitious assets and intangible assets?
- Fictitious: Unreal, e.g., deferred expenses.
- Intangible: Valuable non-physical assets.

26. Is Goodwill a fictitious asset?


No, it is intangible.

27. What is Contingent Liability?


Potential liability depending on future events.

28. Give an example of Contingent Liability.


Pending lawsuit.

29. What is the place of Contingent Liability in the balance sheet of a company?
Disclosed in notes.

30. Placement of Finance Cost in Statement of Profit and Loss.


Expense section.

31. Meaning of all items of Statement of Profit and Loss.


Revenue, expenses, profit, taxes.

32. Give an example of segments of a company.


Banking and insurance divisions.

33. What is meant by Segment Assets?


Segment-specific assets.

34. What is Segment Revenue?


Revenue of a segment.

35. What is Segment Report?


Report on financials of segments.
36. Formula for Current Ratio and its significance.
- Formula: Current Assets ÷ Current Liabilities.
- Significance: Measures liquidity.

37. Standard for Current Ratio/Debt Equity Ratio?


- Current Ratio: 2:1.
- Debt Equity Ratio: 1:1 or lower.

38. What is ROI and its importance?


- Definition: Return on Investment.
- Importance: Measures profitability.

39. Which two profitability ratios make a total of 100%?


Gross Profit Ratio + Net Profit Ratio.

40. Difference between Working Capital Ratio and Working Capital Turnover Ratio?
- WC Ratio: Liquidity measure.
- WC Turnover: Efficiency measure.

41. What is G.P ratio?


Gross Profit ÷ Revenue × 100.

42. Two reasons for poor G.P. ratio.


High costs, low prices.

43. How can you increase G.P. ratio?


Reduce costs, increase prices.

44. Reason for Low N.P. Ratio despite High G.P. Ratio.
High operating/interest expenses.

45. Effect of paying 5000 to creditors on Current Ratio (2:1).


Increase in ratio.

46. Assets in Current Assets but not Quick Assets.


Inventory, prepaid expenses.

47. Treatment of Provision for Tax and Loose Tools in CFS.


- Provision for Tax: Operating outflow.
- Loose Tools: Inventory.

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