Question

State which fo the following would result in inflow/outflow of Cash or Cash Equivalents:
(i) Purchase of Inventory for cash.
(ii) Purchase of goods on credit.
(iii) Sale of Goods costing Rs. 10,000 for Rs. 12,000 for cash.
(iv) Sale fo Goods on Credit.
(v) Purchase of a fixed asset by issue of shares.

Answer 1

Statement Showing the efect of transactions on Cash or Cash Equivalents.
$$\begin{array}{ccc}\text{Transaction}& \text{Effect on Cash or Cash Equivalents}& \text{Reason}\\ \left(i\right)& \text{Outflow}& \text{Cash is decreased by the amount of Inventory.}\\ \left(ii\right)& \text{No effect}& \text{Cash is not affected.}\\ \left(iii\right)& \text{Inflow}& \text{Cash is increased by Rs. 12,000}\\ \left(iv\right)& \text{No effect}& \text{Cash is not affected as it is not a cash transaction.}\\ \left(v\right)& \text{No effect}& \text{Cash is not affected as it is not a cash transaction.}\end{array}$$