ACCOUNTING & FINANCE INTERVIEW QUESTIONS ( 271 - 280)

271 Contingent Asset : An asset the existence ownership or value of which may be known or determined only on the occurrence or non occurrence of one more uncertain future events.

272  Contingent liability : An obligation to an existing condition or situation which may arise in future depending on the occurrence of one or more uncertain future events.

273  Deficiency : the excess of liabilities over assets of an enterprise at a given date is called deficiency.

274 Deficit : The debit balance in the profit and loss a/c is called deficit.

275 Surplus : Credit balance in the profit & loss statement after providing for proposed appropriation & dividend , reserves.

276 Appropriation Assets : An account sometimes included as a separate section of the profit and loss statement showing application of profits towards dividends, reserves.

277 Capital Redemption Reserve : A reserve created on redemption of the average cost:- the cost of an item at a point of time as determined by applying an average of the cost of all items of the same nature over a period. When weights are also applied in the computation it is termed as weight average cost.

278 Floating Change : Assume change on some or all assets of an enterprise which are not attached to specific assets and are given as security against debt.

279        Difference between Funds flow and Cash flow statement :

Ø A Cash flow statement is concerned only with the change in cash position while a funds flow analysis is concerned with change in working capital position between two balance sheet dates.

Ø A cash flow statement is merely a record of cash receipts and disbursements. While studying the short-term solvency of a business one is interested not only in cash balance but also in the assets which are easily convertible into cash.

280 Difference Between the Funds flow and Income statement :

Ø A funds flow statement deals with the financial resource required for running the business activities. It explains how were the funds obtained and how were they used,

                            Whereas an income statement discloses the results of the business activities,   i.e., how much has been earned and how it has been spent.

Ø A funds flow statement matches the “funds raised” and “funds applied” during a particular period. The source and application of funds may be of capital as well as of revenue nature.

                                             An income statement matches the incomes of a period with the expenditure of that period, which are both of a revenue nature.