Question : Prince Ltd. purchased machinery of Rs.10,00,000 issuing a cheque of Rs.2,50,000 and 10% Debentures of Rs.7,50,000. In the Cash Flow Statement, the transaction will be shown as _____.
Option 1: Outflow under Investing Activity Rs.10,00,000, inflow under Financing Activity as Receipt for debentures Rs.7,50,000.
Option 2: Outflow under Investing Activity Rs.2,50,000
Option 3: Inflow of Rs.7,50,000 as Financing Activity
Option 4: None of the above
Correct Answer: Outflow under Investing Activity Rs.2,50,000
Solution : In this case, only Rs.250000 is shown in the cash flow statement because the issue of debenture is not an outflow of cash only the cheque issued of Rs. 250000 will be shown in the cash flow statement as Outflow under Investing Activity Rs. 2,50,000.
Hence the correct answer is option 2.
Question : AbC Ltd. purchased machinery of Rs. 20,00,000 issuing a cheque of Rs. 5,00,000 and 10% Debentures of Rs. 15,00,000. In the Cash Flow Statement, the transaction will be shown as
Question : Verma Ltd. paid Rs.1,20,000 as an installment for machinery purchased on credit which included interest of Rs. 20,000. How will this payment be presented while preparing a Cash Flow Statement?
Question : The issue of 9% Debentures to a vendor for the purchase of machinery of Rs. 50,000 will result in inflow outflow or no flow of cash while preparing Cash Flow Statement __________.
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