Classify the following transactions as Operating Activities for a financial company and a non-financial company:

(a) Purchase of Shares on a Stock Exchange. (b) Dividend received on Shares.

(c) Dividend paid on Shares. (d) Loans given.

(e) Loans taken. (f) Interest paid on borrowings.

Open in App

Solution

OPERATING ACTIVITY

Financial Company Non-Financial Company

a. Purchase of Shares on a Stock Exchange -

b. Dividend received on shares

d. Loans given

e. Loans taken

f. Interest paid on borrowings

A financial company deals with securities like shares, bonds, debentures, etc on a regular basis. These securities form part of their stock and hence purchase and sale of these securities will be categorised under Operating Activity. But, Dividend paid by them will be the part of Financing Activities.
However, for a non-financial company issue of shares, debentures, etc form part of financing activities as such issue will increase the capital employed in the business.

Suggest Corrections

Similar questions

Classify the following activities into (i) Operating Activities, (ii) Investing Activities, and (iii) Financing Activities in case of (a) a Financial Enterprise, and (b) a Non-Financial Enterprise:
1. Purchase of securities fo a company.
2. Brokerage paid for the purchase fo securities.
3. Sale of securities of a Company.
4. Loans and advances made.
5. Receipts from the repayments of loans and advances.
6. Interest received on securities.
7. Dividend received on securities.
8. Interest paid on borrowings.
9. Dividend paid to shareholders.

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. 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. Mr Santosh purchased

25

shares of a company of FV

R s 50

at MV

R s 56

. The company declared

9 %

dividend. After receiving dividend, he sold the shares at MV

R s 52

.He paid brokerage at the rate

0.5 %

for transaction. What is his profit or loss in this transaction?

A mutual fund company receives a dividend of Rs. 25 lakhs on its investment in another company's shares. Why is it a cash inflow from operating activities for this company?

Join BYJU'S Learning Program

(a) Purchase of Shares on a Stock Exchange.	(b) Dividend received on Shares.
(c) Dividend paid on Shares.	(d) Loans given.
(e) Loans taken.	(f) Interest paid on borrowings.

OPERATING ACTIVITY
Financial Company	Non-Financial Company
a. Purchase of Shares on a Stock Exchange	-
b. Dividend received on shares
d. Loans given
e. Loans taken
f. Interest paid on borrowings

Classify the following transactions as Operating Activities for a financial company and a non-financial company: (a) Purchase of Shares on a Stock Exchange. (b) Dividend received on Shares. (c) Dividend paid on Shares. (d) Loans given. (e) Loans taken. (f) Interest paid on borrowings.

Classify the following transactions as Operating Activities for a financial company and a non-financial company:

(a) Purchase of Shares on a Stock Exchange. (b) Dividend received on Shares.

(c) Dividend paid on Shares. (d) Loans given.

(e) Loans taken. (f) Interest paid on borrowings.