Question

From the following information, calculate the net cash flows from financing activities:

$\begin{array}{ccc}& \text{1st april 2018}& \text{31st march 2019}\\ \text{Long term loans}& 2,00,000& 2,50,000\end{array}$

During the year the company repaid the loan amounting to Rs. 1,00,000.

• A. Rs. 1,50,000
• B. Rs. 50,000
• C. Rs. 1,00,000
• D. None of these

Answer 1

The correct option is B

Rs. 50,000

Rs.50,000

$\begin{array}{cc}\text{Cash flows from Financing Activities}& \\ \text{Proceeds from long-term borrowings}& 1,50,000\\ \text{Repayment of long-term borrowings}& (1,00,000)\\ \text{Net cash inflow from Financing Activities}& \overline{\underset{–}{50,000}}\end{array}$

Working Notes:

$\text{Dr}\text{Long-term Loan Account}\text{Cr}\begin{array}{cccccc}\text{Particulars}& \text{J.F.}& \text{Amount}& \text{Particulars}& \text{J.F.}& \text{Amount}\\ & & \text{(Rs.)}& & & \text{(Rs.)}\\ \text{Cash (loan repaid)}& & 1,00,000& \text{Balance b/d}& & 2,00,000\\ \text{Balance c/d}& & 2,50,000& \text{Cash (new loan raised)}& & 1,50,000\\ & & \overline{\underset{–}{\underset{–}{3,50,000}}}& & & \overline{\underset{–}{\underset{–}{3,50,000}}}\end{array}$