Cash Flow & Funds Flow
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 67 rapid-fire Q&A cards.
What does Cash Flow Statement reveal that Profit and Loss Statement cannot?
Actual inflows and outflows of cash; profit doesn't pay salaries, EMIs, or bills—only cash does.
Define Cash and Cash Equivalents in banking context.
Cash in hand, bank balances, and marketable securities readily convertible with insignificant value-change risk.
How is interest received by a bank classified under AS-3?
Operating activity. For non-financial entities like Tata Steel, interest received is investing activity.
List three items classified as Operating Activities for non-financial enterprises.
Purchase/sale of goods, trade receivable collections, wages/salaries paid, royalties, commissions.
Name five items classified as Investing Activities.
Purchase/sale of fixed assets, securities purchase/sale, loans given to third parties, interest/dividend received.
What transactions are classified as Financing Activities?
Equity/debenture issuance, share buy-back, borrowing repayment, dividends paid, interest on debentures.
Are movements between Cash and Cash Equivalents shown in Cash Flow Statement?
No. Cash deposits/withdrawals and marketable securities purchases are mere reclassifications, not cash flows.
How should mixed transactions like loan EMI be treated in Cash Flow Statement?
Split into components: interest under Operating Activities, principal repayment under Financing Activities.
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