Question : Kunal Ltd under which activity will the amount of interest paid on a debentures settled in the current year be shown?
Option 1: Investing Activities
Option 2: Financing Activities
Option 3: Both investing and Financing Activities
Option 4: Operating Activities
Correct Answer: Financing Activities
Solution : Answer = Financing activities
Interest paid on debentures is a financing activity because it involves payments related to obtaining financial resources for the company. Financing activities involve raising capital and repaying debts, which includes paying interest on debentures. Therefore, the amount of interest paid on debentures will be shown under financing activities in the cash flow statement.
Hence, the correct option is 2.
