106. Which one of the following is the Regulator of the Credit Rating Agencies in India?
RBI
SBI
SIDBI
SEBI
Answer.4. SEBI
Explanation:
SEBI is the Regulator of the Credit Rating Agencies in India. It is established by the Act of Parliament in 1992 to protect the interests of investors in securities, to promote the development of and regulate the securities market.
107. ‘Where Got’ Where Gone’ Statement is also known as
Balance Sheet
Profit and Loss Statement
Funds Flow Statement
Capital Budget
Answer.3. Funds Flow Statement
Explanation:
Where Got’ Where Gone’ Statement is also known as funds Flow Statement.
Funds flow statement is called by various names such as Sources and Application of Funds; Statement of Changes in Financial Position; Sources and Uses of Funds; Summary of Financial Operations: Where came in and Where gone out Statement; Where got, Where gone Statement; Movement of Working Capital Statement; Movement.
108. Operating Loss is a
Application of Fund
Source of Fund
Loss of Assets
None of the Above
Answer.1. Application of Fund
Explanation:
Operating Loss is an application of Fund. An operating loss occurs when a company’s operating expenses exceed gross profits (or revenues in the case of a service-oriented company).
109. Public Deposit accepted by a company represents
Use of Fund
Source of Fund
Application of Fund
Equilibrium
Answer.2. Source of Fund
Explanation:
Public Deposit accepted by a company represents source of Fund.
A company can invite public deposits for a period of six months to three years. Therefore, public deposits are primarily a source of short-term finance.
However, the deposits can be renewed from time to time. Renewal facility enables companies to use public deposits as medium-term finance.
110. Redemption of Debenture by a company represents
Application of Fund
Source of Fund
Loss of the Company
None of the Above
Answer.1. Application of Fund
Explanation:
Redemption of Debenture by a company represents application of Fund.
When debentures are redeemed, liability on account of debentures is discharged. The amount of funds required for redemption of debentures is quite large and, therefore, prudent companies make sufficient provision out of profits and accumulate funds to redeem debentures.
111. Only Current Assets and Current Liabilities are shown in the statement showing
Changes in Assets
Changes in Liabilities
Changes in Working Capital
Changes in Fixed Capital
Answer.3. Changes in Working Capital
Explanation:
Only Current Assets and Current Liabilities are shown in the statement showing changes in Working Capital.
A statement of changes in working capital is prepared by recording changes in current assets and current liabilities during the accounting period. Working capital during this period is bound to change due to an increase or decrease in the current assets and current liabilities.
112. Decrease in Working Capital Denotes
Application of Fund
Source of Fund
Disposition of Fund
Operating Loss
Answer.2. Source of Fund
Explanation:
A decrease in net working capital balance during the accounting period is considered a source of funds. An increase in net working capital balance during the accounting period is considered a use of funds.
113. Which one of the following is not an Application of Fund?
Purchase of Fixed Assets
Repayment of Loans
Operating Loss
Operating Profit
Answer.4. Operating Profit
Explanation:
When any Fixed Asset (i.e. Plant and Machinery, Land and Building, Furniture and Fittings, etc.) is acquired or purchased, the same is treated as an ‘Application of Funds’
The application of funds include
Purchase of Fixed Assets
Repayment of Loans
Operating Loss
Goodwill
114. When liability decreases it is a ________
Source of Funds
Profit
Application of Funds
Loss
Answer.3. Application of Funds
Explanation:
When liability decreases it is a application of Funds.
The application of funds includes any of six results of spending money. Spending money can result in a loss, an increase in current assets (other than cash), an increase in non-current assets, a decrease in current liabilities, a decrease in non-current liabilities, or a decrease in shareholders’ equity.
115. Loss on sale of Fixed Assets / Investment will be shown on the credit side of the adjusted profit and loss account.
True
False
Can’t Say
None
Answer.2. False
Explanation:
Journal entry for loss on sale of fixed assets is shown on the debit side of the profit and loss account. Hence the statement is wrong.
116. The balances of Provision for Taxation were Rs. 20000 and Rs. 15000 in 2019 and 2020 respectively, if in the current year tax paid were Rs. 10000 then what will be the current year provision for tax made from profit?
Rs. 7000
Rs. 5000
Rs. 15000
Rs. 10000
Answer.2. Rs. 5000
Explanation:
The balances of Provision for Taxation were Rs. 20000 and Rs. 15000 in 2019 and 2020 respectively, if in the current year tax paid were Rs. 10000 then Rs 5000 will be the current year provision for tax made from profit.
117. The proposed dividend for the Current Year would appear on the debit side of which account?
Profit and Loss Account
Balance Sheet
Adjusted Profit and Loss Account
Adjusted Balance Sheet
Answer.3. Adjusted Profit and Loss Account
Explanation:
The proposed dividend for the Current Year would appear on the debit side of the Adjusted Profit and Loss Account.
Dividend Proposed or Final Dividend or Proposed Dividend: The item is for the adjustment in question. It is given outside the trial balance. Therefore it is recorded in the two places. First, it is recorded on the debit side of the profit and loss adjustment account and then it is shown on the liability side of the Balance Sheet under the heading of provision of “Current Liabilities and Provision”.
118. If the shares are issued at a premium during the year then the amount of premium received will appear as a _______
Source of Fund
Application of Fund
Profit
Loss
Answer.1. Source of Fund
Explanation:
If the shares are issued at a premium during the year then the amount of premium received will appear as a Source of Fund. The premium received on the issue of shares is credited to the share premium account but not to the Profit and Loss account.
119. If we want to prepare the funds flow statement, we should have
Balance sheets for two consecutive years
Funds flow statements of two consecutive years
Budget for next financial year
All of the Above
Answer.1. Balance sheets for two consecutive years
Explanation:
A Funds Flow Statement is a financial document that analyses a company’s Balance Sheet for two years to validate the movement of funds from the previous financial year to the current year. In other words, it compares the source of inflow and outflow of funds during the concerned accounting period and analyses how it affects the working capital of an organization.
120. Last year’s proposed dividend has been paid during the current year and hence will be shown as________
A source of funds
An application of funds
Increase in liabilities
None of the above
Answer.2. An application of funds
Explanation:
Last year’s proposed dividend has been paid during the current year and hence will be shown as an application of funds.
While treating the proposed dividend as non-current liability, it is not shown in the schedule. The previous year’s proposed dividend is supposed to have been paid during the current year, so it is shown on the application side.
