While preparing a fund flow statement, attention is to be given to _______.

Current Asset and Current Liabilities

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Changes in Fixed assets and Fixed Liabilities

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Changes in Fluctuating Capital

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Changes in Cash Receipts and Payments

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Solution

The correct option is B Changes in Fixed assets and Fixed Liabilities
Funds Flow Statement is a statement prepared to analyse the reasons for changes in the Financial Position of a Company between two Balance Sheets.

It shows the inflow and outflow of funds i.e. Sources and Applications of funds for a particular period.

It is a statement which involves no error in the amount of funds inflow and outflow as it pays attention on the changes in value of fixed assets and fixed liabilities.

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Similar questions

Q. In a statement of cash flows, a company investing in short-term financing investments and in fixed assets results in ______________.

In case a company does not have sufficient funds for the purchase of fixed assets or for payment to creditors it may offer and allot its shares to vendor/ creditors in lieu of cash. In such a case, which account is debited ?

Following is the Balance Sheet of Raj Oil Mills Limited as at March 31, 2017. Calculate Current Ratio.

Particulars	(Rs)
I. Equity and Liabilities:
1. Shareholders’ funds
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b) Reserves and surplus	35,000
2. Current Liabilities
a) Trade Payables	72,000
Total	8,97,000
II. Assets
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a) Fixed assets
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2. Current Assets
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b) Trade Receivables	28,800
c) Cash and cash equivalents	59,400
Total	8,97,000

Q. Consider the following statements.
1. Operational loss is a source of funds
2. Decrease in working capital is a source of funds
3. Addition to fixed assets are an application of funds
4. Fresh introduction of capital is an application of funds
Which of the above statements are applicable while preparing the funds flow statement?

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