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

Which statement best describes a cash flow statement prepared for a client in personal financial planning?

A personal cash flow statement records the client's inflows and outflows over a period and shows the resulting surplus or deficit. It differs from the balance sheet, which is a snapshot of assets and liabilities at a particular date.

  1. AIt lists assets and liabilities at a point in time
  2. BIt records inflows and outflows over a period, showing the surplus or deficitCorrect
  3. CIt projects the market value of the client's portfolio
  4. DIt shows only the client's tax liability for the year

Explanation

A cash flow statement covers a period and shows income received and expenses paid, giving the surplus or deficit. The statement of assets and liabilities is the point-in-time one.

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