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B
Sale of fixed assets
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C
Interest paid on long term deposits by a bank
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D
Issue of equity share capital
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Solution
The correct option is C
Interest paid on long term deposits by a bank
Payment of interest is an example of cash flow from operating activity for financing company.
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Similar questions
Q. Classify the following into (i) Operating Acivities, (ii) Investing Activities, (iii) Financing Activities and (iv) Cash Equivalents while preparing a Cash Flow Statement: 1. Cash Sales 2. Cash Received from Trade Receivables 3. Purchase of Building 4. Sale of Building 5. Issue of Share Capital or Debentures 6. Buy- back of Equity Shares 7. Dividend Paid 8. Interest paid on Debentures or Long - term Loans by (a) Finance Company (b) Non- Finance Company 9. Cash Purchases 10. Cash paid to trade payables 11. Redemption of Debentures and Preference Shares 12. Repayment of Long - term Loan 13. Office Expenses 14. Selling and Distribution Expenses 15. Manufacturing Expenses 16. Purchase of Goodwill 17. Sale of Patent 18. Purchase of Investments 19. Sale of Investments by (a) Finance Company (b) Non- Finance Company 20. Commission and Royalty received 21. Interest received on Investments by (a) Finance company (b) Non Finance company 22. Dividend received on Shares by (a) Finance Company (b) Non - Finance company 23. Rent Paid 24. Rent received if (a) Company's main business is property business (b) Other business 25. Income Tax Paid 26. Income Tax Refund received 27. Bank Balance 28. Short- term Deposits in Bank 29. Investment in Short - term or Marketable Securities
Q. Assuming that the Debt-Equity Ratio is 2 : I, state, giving reasons, which of the following transactions would (I) Increase; (ii) Decrease; (ii.) Not alter the Debt-Equity Ratio : (i) Issue of new shares (Preference/Equity) for Cash. (ii) Issue of new shares (Preference/Equity) against purchase of fixed asset. (iii) Buy-back of its own shares by a Company. (iv) Issue of Debentures for Cash. (v) Issue of Debentures against purchase of fixed asset. (vi) Repayment of Long-term Borrowings. (vii) Conversion of Debentures into Equity Shares/Preference Shares. (viii) Sale of a fixed asset at par. (ix) Sale of a fixed asset at profit. (x) Sale of a fixed asset at loss. (xi) Purchase of a fixed asset on a credit of 2 months. (xii) Purchase of a fixed asset on long-term deferred payment basis. (xiii) Issue of Bonus Shares.
Q. Identify the transactions as belonging to (i) Operating Activities, (ii) Investing Activities, (iii) Financing Activities and (iv) Cash and Cash Equivalents:(a) Cash Sale of Goods(b) Cash Received against Revenue from Services rendered (c) Cash Purchase of Goods(d) Cash Paid against Services Taken(e) Patents Purchased(f) Marketable Securities(g) Bank Overdraft(h) Proceeds from Issue of Debentures(i) Purchase of Shares(j) Repayment of Long-term Loan(k) Commission Received(l) Redemption of Debentures(m) Interest on Debentures(n) Interest on Investments(o) Income Tax Paid(p) Income Tax Paid on Gain of Sale of Asset(q) Cash Received from Debtors(r) Cash Paid to Creditors.
Q. Assuming that Proprietary Ratio is 0.6 : 1, state giving reasons, whether the ratio will increase, decrease or will not change in each one of the following cases: (i) Issue of new equity shares for cash. (ii) Issue of equity shares against purchase of machinery. (iii) Issue of debentures against purchase of machiney. (iv) Redemption of debentures for cash. (v) Conversion of debentures into preference shares. (vi) Buy-back of its own shares by a company. (vii) Purchase of a fixed asset for cash. (viii) Purchase of a fixed asset on long-term deferred payment basis. (ix) Sale of a fixed asset costing Rs. 1,00,000 for Rs. 80,000. (x) Sale of a fixed asset costing Rs. 2,00,000 for Rs. 2,50,000. (xi) Issue of Bonus Shares.
Q. Classify the Following Activities into cash Flows under (A) Operating (B) Investing (C) Financing:(i) Cash Sales of Goods.(ii) Income Tax paid.(iii) Dividend Paid.(iv) Purchase of Fixed Assets.(v) Redemption of Debentures.(vi) Royalty Received.(vii) Cash paid to the Suppliers(viii) Rental Income.
Examples of the direct method of cash flows from operating activities include: Salaries paid out to employees. Cash paid to vendors and suppliers. Cash collected from customers.
Examples of common cash flow items stemming from a firm's financing activities are: Receiving cash from issuing stock or spending cash to repurchase shares. Receiving cash from issuing debt or paying down debt. Paying cash dividends to shareholders.
To calculate cash flow from financing activities, add your dividends paid to the repurchase of debt and equity, then subtract the total number from cash inflows from issuing equity or debt. These can also be found in a cash-flow statement.
Correct answer:Option d. Increase (or minus decrease) in stock, plus increase (or minus decrease) in debt, minus interest paid, minus dividends paid. Explanation: Cash flow from financing activities include the transactions that are undergone to fund the company's assets and investments.
You can find the cash flow from operating activities on a company's cash flow statement. This section normally appears at the top of the statement. You can also calculate operating cash flow by adding together a company's net income, non-cash items (adjustments to net income), and working capital.
The cash flows from operating activities are the cash flows that are related to the business operations of a firm such as cash received from customers, cash paid for advertising, and cash paid to suppliers.
Some examples of investing cash flows are payments for the purchase of land, buildings, equipment, and other investment assets and cash receipts from the sale of land, buildings, equipment, and other investment assets.
Cash inflows (proceeds) from capital financing activities include: Receipts from proceeds of issuing or refunding bonds and other short or long-term borrowings used to acquire, construct or improve capital assets.
Cash flows from capital and related financing activities include acquiring and disposing of capital assets, borrowing money to acquire, construct or improve capital assets and repaying the principal and interest amounts related to these activities.
Financing cash flow is a category of cash flow in a company's financial statements that reflects the inflow and outflow of cash related to financing activities.
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