Cash Flow Statement · Class 12 · CBSE · Commerce Accountancy
An enterprise purchases machinery worth Rs 5,00,000 by issuing equity shares of the same amount. How will this transaction be recorded in the Cash Fl…
Practice question from Cash Flow Statement (Class 12 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
hard · MCQ · Q-5CE473
An enterprise purchases machinery worth Rs 5,00,000 by issuing equity shares of the same amount. How will this transaction be recorded in the Cash Flow Statement?
- A.Inflow under Investing Activity and Outflow under Financing Activity
- B.Outflow under Investing Activity and Inflow under Financing Activity
- C.It will not be recorded in the Cash Flow StatementCorrect answer
- D.Outflow under Operating Activity
Solution
Transactions that do not require the use of cash or cash equivalents (such as the acquisition of assets by issuing shares) are non-cash transactions and are excluded from the Cash Flow Statement. They are instead disclosed in the notes to accounts.
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