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Question : Purchase of fixed assets against issue of shares; would result in inflow/outflow/no flow of Cash and Cash Equivalents

Option 1: Inflow

Option 2: Outflow

Option 3: No flow

Option 4: None of the above


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 9th Jan, 2024

Correct Answer: No flow


Solution : Answer = No flow

When Fixed assets are purchased and payment is made by issuing equity shares will be neither an inflow nor outflow of cash.
The purchase of fixed assets against the issue of shares would result in no flow of cash and cash equivalents. This transaction involves an exchange of one asset (shares) for another (fixed assets) without any involvement of cash, thereby resulting in no change in the cash position.
Hence, the correct option is 3.

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