Question

Which of the following are true or false?

a) Purchase of fixed assets is a use of funds.
b) For funds flow statement, provision for taxation will be treated as an item of internal source.

• A. both (a) and (b) are true
• B. both (a) and (b) are false
• C. (a) is true but (b) is false
• D. (a) is false but (b) is true

Answer 1

The correct option is A both (a) and (b) are true

Use of funds refers to investing funds in purchase of assets which gives return after some period of time. Hence, purchase of fixed assets is a use of funds.

Provision for taxation is treated as an item of internal source because it is made internally.