A business begins the year with cash of Rs. 75,000. During the year, operating activities provide Rs. 55,000, investing activities use Rs. 40,000 and financing activities provide Rs. 20,000. What is the closing cash balance?
Correct answer: A. Rs. 90,000
- A. Rs. 90,000
- B. Rs. 110,000
- C. Rs. 150,000
- D. Rs. 40,000
Explanation
The net increase in cash is Rs. 55,000 minus Rs. 40,000 plus Rs. 20,000, which equals Rs. 35,000. Adding this increase to opening cash of Rs. 75,000 gives closing cash of Rs. 110,000. Therefore, option b is correct.
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Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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