Consider the following statements: (1) Depreciation reduces tax liability, hence it is a source of funds. (2) Decrease in current liabilities during the year results in an increase in working capital. (3) The term cash e

CS Executive · Cost and Management Accounting · PYQS · December 2016

Consider the following statements: (1) Depreciation reduces tax liability, hence it is a source of funds. (2) Decrease in current liabilities during the year results in an increase in working capital. (3) The term cash equivalents includes short-term marketable investments. (4) Conversion of debentures into equity shares appears in funds flow statement. (5) Only non-cash expenses are added to net profit to find out funds from operation. Select the incorrect statements from the options given below —

(A) (1), (3), (4) and (5)

(B) (1), (2), (4) and (5)

(C) (1), (4) and (5)

(D) (2), (3) and (4)

Answer & Explanation:

Correct Answer: Option (C)

Official answer key: (C).

Topics: Financial Management

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Consider the following statements: (1) Depreciation reduces tax liability, hence it is a source of funds. (2) Decrease in current liabilities during the year results in an increase in working capital. (3) The term cash e

Answer & Explanation:

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