Q1. [2] § What is a Balance Sheet and a Profit and Loss Account Statement? What is the difference between Balance Sheet and Profit and Loss Account Statements of a company? § How is balance sheet summarized?
List two 'applications of funds' and two sources of funds.
Previously asked in CBSE board exam
2025 92 Q15
Generated by claude-sonnet-4-6 · 2026-06-15 07:07 · grounding rag
Model Answer
Applications of Funds (uses):
- Fixed Assets (purchase of machinery, land, buildings, etc.)
- Investments (long-term investments made by the firm)
Sources of Funds:
- Shareholders' Funds (Share Capital contributed by owners)
- Secured/Unsecured Loans (borrowed funds from creditors/financial institutions)
Explanation
In Fund Flow analysis, sources of funds are inflows (liabilities side of Balance Sheet — share capital, loans, reserves) and applications/uses of funds are outflows (assets side — fixed assets, investments). The Balance Sheet visual in the question directly shows these heads. Examiners expect you to name specific items from the Balance Sheet, not vague terms. Pairing one from each side is sufficient for 1 mark each.
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