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Home Questions CM22S3Q5YV
Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

Match the following for an enterprise while making a cash flow statement:

LIST 1 LIST 2
1) Decrease in current assets a) Contingent liability
2) Decrease in current liabilities b) Not treated in operating profit
3) Cash and cash equivalents c) Added to operating profit before working capital changes
4) Proposed dividend for the current year d) Deducted from operating profit before working capital changes
Options:

1) a, 2) b, 3) c, 4) d

1) c, 2) d, 3) a, 4) b

1) c, 2) d, 3) b, 4) a

1) d, 2) c, 3) a, 4) b

Correct Answer:

1) c, 2) d, 3) b, 4) a

Explanation:

* Decrease in current assets & Decrease in current liabilities- Increase in current assets and decrease in current liabilities are to be deducted while increase in current liabilities and decrease in current assets are to be added up.

* Cash and cash equivalents- Cash and cash equivalents are shown separately in the cash flow statement. It is not treated in operating profit.

* Proposed dividend for the current year- As per AS-4, Contingencies and Events Occurring after the Balance Sheet Date, Proposed dividend is shown in the Notes to Accounts. It will be shown as contingent liability since it becomes a liability after it is declared (approved) by the shareholders.

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