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Shyam is running a start-up. His initial investments are high and he is trying hard to manage and increase his cash flow. The sundry expenses that his firm incurs is negligible. He found from his accountant that the amount of pre-paid expenses in the balance sheet, which were booked from the previous year to the current year was increased. Shyam also ensured that his cash funded by the venture capitalists did not reduce when compared to the previous year. The interest that he gets from his fixed deposits increases, which is in tune with his sundry expenses. The final effect on cash for this year would be _____________.
- a)Cash flow marginally increases
- b)Cash flow exponentially increases
- c)Cash flow remains the same .
- d)None of the above
Correct answer is option 'D'. Can you explain this answer?
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Shyam is running a start-up. His initial investments are high and he i...
As amount of pre-paid expenses in the balance sheet, which were booked from the previous year to the current year was increased, means cash has reduced. Also what he gets from his fixed deposits increases, which is in equal to his sundry expenses. Hence the final effect on cash for this year is that it reduces.
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Shyam is running a start-up. His initial investments are high and he i...
Effect of Increased Pre-paid Expenses
The increase in pre-paid expenses on the balance sheet indicates that Shyam's firm has paid for expenses in advance, which will be utilized in the current year. This means that the cash outflow has already occurred in the previous year, resulting in a decrease in cash. Therefore, the effect on cash for this year would be a reduction.
Effect of Cash Funded by Venture Capitalists
Shyam ensured that the cash funded by venture capitalists did not reduce when compared to the previous year. This means that the amount of cash invested by venture capitalists remains the same, resulting in no change in the cash flow.
Effect of Increased Interest from Fixed Deposits
The increase in interest from fixed deposits indicates that Shyam is earning more income from his fixed deposits. This increase in interest income will result in an inflow of cash, thereby increasing the cash flow.
Overall Effect on Cash Flow
Taking into consideration the above factors, the final effect on cash flow for this year would be a combination of the reduction in cash due to increased pre-paid expenses and the increase in cash due to increased interest from fixed deposits. Since the question does not provide information about the magnitude of these changes, it is not possible to determine the exact impact on cash flow. Therefore, the correct answer is option D - None of the above.
The final effect on cash flow could be positive, negative, or remain the same depending on the magnitude of the changes in pre-paid expenses and interest income.
The increase in pre-paid expenses on the balance sheet indicates that Shyam's firm has paid for expenses in advance, which will be utilized in the current year. This means that the cash outflow has already occurred in the previous year, resulting in a decrease in cash. Therefore, the effect on cash for this year would be a reduction.
Effect of Cash Funded by Venture Capitalists
Shyam ensured that the cash funded by venture capitalists did not reduce when compared to the previous year. This means that the amount of cash invested by venture capitalists remains the same, resulting in no change in the cash flow.
Effect of Increased Interest from Fixed Deposits
The increase in interest from fixed deposits indicates that Shyam is earning more income from his fixed deposits. This increase in interest income will result in an inflow of cash, thereby increasing the cash flow.
Overall Effect on Cash Flow
Taking into consideration the above factors, the final effect on cash flow for this year would be a combination of the reduction in cash due to increased pre-paid expenses and the increase in cash due to increased interest from fixed deposits. Since the question does not provide information about the magnitude of these changes, it is not possible to determine the exact impact on cash flow. Therefore, the correct answer is option D - None of the above.
The final effect on cash flow could be positive, negative, or remain the same depending on the magnitude of the changes in pre-paid expenses and interest income.
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Shyam is running a start-up. His initial investments are high and he is trying hard to manage and increase his cash flow. The sundry expenses that his firm incurs is negligible. He found from his accountant that the amount of pre-paid expenses in the balance sheet, which were booked from the previous year to the current year was increased. Shyam also ensured that his cash funded by the venture capitalists did not reduce when compared to the previous year. The interest that he gets from his fixed deposits increases, which is in tune with his sundry expenses. The final effect on cash for this year would be _____________. a)Cash flow marginally increases b)Cash flow exponentially increases c)Cash flow remains the same . d)None of the aboveCorrect answer is option 'D'. Can you explain this answer?
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Shyam is running a start-up. His initial investments are high and he is trying hard to manage and increase his cash flow. The sundry expenses that his firm incurs is negligible. He found from his accountant that the amount of pre-paid expenses in the balance sheet, which were booked from the previous year to the current year was increased. Shyam also ensured that his cash funded by the venture capitalists did not reduce when compared to the previous year. The interest that he gets from his fixed deposits increases, which is in tune with his sundry expenses. The final effect on cash for this year would be _____________. a)Cash flow marginally increases b)Cash flow exponentially increases c)Cash flow remains the same . d)None of the aboveCorrect answer is option 'D'. Can you explain this answer? for CAT 2024 is part of CAT preparation. The Question and answers have been prepared according to the CAT exam syllabus. Information about Shyam is running a start-up. His initial investments are high and he is trying hard to manage and increase his cash flow. The sundry expenses that his firm incurs is negligible. He found from his accountant that the amount of pre-paid expenses in the balance sheet, which were booked from the previous year to the current year was increased. Shyam also ensured that his cash funded by the venture capitalists did not reduce when compared to the previous year. The interest that he gets from his fixed deposits increases, which is in tune with his sundry expenses. The final effect on cash for this year would be _____________. a)Cash flow marginally increases b)Cash flow exponentially increases c)Cash flow remains the same . d)None of the aboveCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Shyam is running a start-up. His initial investments are high and he is trying hard to manage and increase his cash flow. The sundry expenses that his firm incurs is negligible. He found from his accountant that the amount of pre-paid expenses in the balance sheet, which were booked from the previous year to the current year was increased. Shyam also ensured that his cash funded by the venture capitalists did not reduce when compared to the previous year. The interest that he gets from his fixed deposits increases, which is in tune with his sundry expenses. The final effect on cash for this year would be _____________. a)Cash flow marginally increases b)Cash flow exponentially increases c)Cash flow remains the same . d)None of the aboveCorrect answer is option 'D'. Can you explain this answer?.
Shyam is running a start-up. His initial investments are high and he is trying hard to manage and increase his cash flow. The sundry expenses that his firm incurs is negligible. He found from his accountant that the amount of pre-paid expenses in the balance sheet, which were booked from the previous year to the current year was increased. Shyam also ensured that his cash funded by the venture capitalists did not reduce when compared to the previous year. The interest that he gets from his fixed deposits increases, which is in tune with his sundry expenses. The final effect on cash for this year would be _____________. a)Cash flow marginally increases b)Cash flow exponentially increases c)Cash flow remains the same . d)None of the aboveCorrect answer is option 'D'. Can you explain this answer? for CAT 2024 is part of CAT preparation. The Question and answers have been prepared according to the CAT exam syllabus. Information about Shyam is running a start-up. His initial investments are high and he is trying hard to manage and increase his cash flow. The sundry expenses that his firm incurs is negligible. He found from his accountant that the amount of pre-paid expenses in the balance sheet, which were booked from the previous year to the current year was increased. Shyam also ensured that his cash funded by the venture capitalists did not reduce when compared to the previous year. The interest that he gets from his fixed deposits increases, which is in tune with his sundry expenses. The final effect on cash for this year would be _____________. a)Cash flow marginally increases b)Cash flow exponentially increases c)Cash flow remains the same . d)None of the aboveCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Shyam is running a start-up. His initial investments are high and he is trying hard to manage and increase his cash flow. The sundry expenses that his firm incurs is negligible. He found from his accountant that the amount of pre-paid expenses in the balance sheet, which were booked from the previous year to the current year was increased. Shyam also ensured that his cash funded by the venture capitalists did not reduce when compared to the previous year. The interest that he gets from his fixed deposits increases, which is in tune with his sundry expenses. The final effect on cash for this year would be _____________. a)Cash flow marginally increases b)Cash flow exponentially increases c)Cash flow remains the same . d)None of the aboveCorrect answer is option 'D'. Can you explain this answer?.
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