Cash Flow Statement - 2

Which of the following is not an investing cash flow?

• (A) Purchase of marketable securities for 25,000 cash

• (B) Sales of land for 28,000 cash

• (C) Sale of 2,500 shares (held as investment) for 15 each

• (D) Purchase of equipment for 500 cash

Answer explanation

Purchase of marketable securities is considered as cash and cash equivalents and so does not form the part of investing cash flow.

Additional Information: Interest on debentures is paid on half yearly basis on 30 ^ (th) September and 31 ^ (st) March each year. Debentures were redeemed on 30th September, 2023.

How much amount (related to above information) will be shown in Financing Activity for Cash Flow Statement prepared on 31 ^ (st) March, 2024?

• (A) Outflow 40,000

• (B) Inflow 42,600

• (C) Outflow 61,600

• (D) Outflow 64,000

Answer explanation

. Which of the following transactions will not result into flow of cash?

• (A) Issue of equity shares of 1,00,000

• (B) Purchase of machinery of₹ 1,75,000

• (C) Redemption of 9% debentures 3,50,000

• (D) Cash deposited into bank 15,000

. Pick the odd one out :

• (A) Issue of shares in cash

• (B) Issue of debentures in cash

• (C) Proceeds from long-term loans

• (D) Cash received as royalty

Answer explanation

Royality is operating income rest all are financing activities

Assertion (A): Depreciation is added to the net profit before tax.

Reason (R): Depreciation is a non-cash item which is an expense.

• (A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

• (B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• (C) Assertion (A) is true, but Reason (R) is false.

• (D) Assertion (A) is false, but Reason (R) is true.

Additional Information: Depreciation on fixed assets was 2,00,000 for the year. How much amount for 'Purchase of fixed assets' will be shown in investing activity for cash flow statement prepared on 31st March, 2018?

• (A) Outflow 8,30,000

• (B) Inflow 42,600

• (C) Outflow 6,30,000

• (D) None of these

Answer explanation

Explanation: Cash Outflow Value of Fixed Assets on 31/3/2018 Value of Fixed asset on 31/03/2017 + Depreciation = 23,80,000-17,50,000 + 2,00,000 = 8,30,000