A-AS Level (CIE) Accounting Paper-3: Specimen Questions with Answers 34 - 35 of 50

Question 34

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Question

MCQ▾

Assets which can be converted into cash within a period of one year are called as:

Choices

Choice (4)
a.Fixed assets
b.Intangible assets
c.Investments
d.Current assets

Answer

d.

Explanation

  • Current assets are the assets which can be converted into cash within a short period of one year or less without disturbing the normal operations of a business. Current assets include cash, cash equivalents, inventory of stock, marketable securities, liabilities which are pre-paid, accounts receivable, and other liquid assets.
  • In personal finance current assets are assets that a person can readily convert to cash to pay outstanding debts and cover liabilities without having to sell its fixed assets.

Question 35

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Question

MCQ▾

Which of the following is incorrect about the statement of cash flows?

Choices

Choice (4)
a.It provides information about operating activities, investing, and financing activities.
b.It reconciles ending cash balance with the balance as per bank statement.
c.It provides information about the cash receipt and cash payments of an enterprise.
d.It provides information about operating activities.

Answer

c.

Explanation

A cash flow statement refers to a statement which represents the inflows and outflows of cash in each period. In other words, it is a summary of sources and applications of cash during a span of time. It analyses the reasons for changes in balance of cash between the two balance sheet dates. The term cash stands for cash and cash equivalents.

A cash flow statement includes only those items which influence cash transactions. As such the cash flow statement is also called as statement of changes in financial position.

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