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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Evaluating the Financial Position of Clients

Which statement about a client's personal cash flow statement is correct?

A personal cash flow statement records the client's inflows and outflows over a period, such as a year, to show the surplus or deficit. Point-in-time asset values and net worth belong to the balance sheet.

  1. AIt records the market value of assets at a point in time
  2. BIt records inflows and outflows over a period such as a yearCorrect
  3. CIt is prepared only for clients who have loans
  4. DIt shows net worth as its closing figure

Explanation

A cash flow statement tracks money received and spent over a period, revealing surplus or deficit. The balance sheet, not the cash flow statement, shows assets at a point in time and net worth. It is useful for all clients, not just borrowers.

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