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Standard XII

Accountancy

Cash Flow from Operating Activities-Indirect Method

Purchase of m...

Question

Purchase of machinery by means of issue of shares should be ___ from cash flow statement

Included

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Excluded

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Subtracted

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None of these

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Solution

The correct option is B
Excluded

Purchase of machinery by means of issue of shares should be excluded from cash flow statement as it doesnot involve cash.

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Similar questions

Q. State which of the following would result in inflow/outflow or no flow of Cash and Cash Equivalents:
(a) Sale of Fixed Assets, Book Value ₹ 1,00,000 at a profit of ₹10,000.
(b) Sale of goods against cash.
(c) Purchase of machinery for cash.
(d) Purchase of Land and Building for ₹10,00,000. Consideration paid by issue of debentures.
(e) Issued fully paid Bonus Shares.
(f) Cash withdrawn from bank.
(g) Payment of Interim Dividend.
(h) Proposed Dividend.

Assuming that Proprietary Ratio is 0.6 : 1, state giving reasons, whether the ratio will increase, decrease or will not change in each one of the following cases:

(i) Issue of new equity shares for cash.

(ii) Issue of equity shares against purchase of machinery.

(iii) Issue of debentures against purchase of machiney.

(iv) Redemption of debentures for cash.

(v) Conversion of debentures into preference shares.

(vi) Buy-back of its own shares by a company.

(vii) Purchase of a fixed asset for cash.

(viii) Purchase of a fixed asset on long-term deferred payment basis.

(ix) Sale of a fixed asset costing Rs. 1,00,000 for Rs. 80,000.

(x) Sale of a fixed asset costing Rs. 2,00,000 for Rs. 2,50,000.

(xi) Issue of Bonus Shares.

Q. X purchased the running business of A for Rs.

60, 000

. In place of cash he discharged the purchase consideration by issue of equity shares of Rs.

10

each at

20 %

premium. Find the number of shares to be issued?

Q. Sumo Ltd. purchased plant and machinery for ₹3,60,000 for which it is paying by issue of shares of ₹100 each at 20% premium. How many shares will be issued as consideration?

[0.88 marks]

Q. A Ltd. Acquired assets worth Rs.

11, 25, 000

from B. Ltd. by issue of equality shares of Rs.

100

at premium of

25 %

. The number of shares to be issued by A Ltd, for the purchase consideration.

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Purchase of machinery by means of issue of shares should be ___ from cash flow statement

The correct option is B Excluded Purchase of machinery by means of issue of shares should be excluded from cash flow statement as it doesnot involve cash.

The correct option is B
Excluded

Purchase of machinery by means of issue of shares should be excluded from cash flow statement as it doesnot involve cash.