Which of the following should be on a statement of cash flows under the financing activities section?

The purchase of long-term investments in the common stock of another company.

No worries! We‘ve got your back. Try BYJU‘S free classes today!

The payment of cash to retire a long-term note.

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

The proceed from the sale of building.

No worries! We‘ve got your back. Try BYJU‘S free classes today!

The issuance of a long-term note to acquire land.

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B The payment of cash to retire a long-term note.
As per AS-3, financing activities are activities that result in changes in the size and composition of the owner's capital and borrowings of the enterprise. Separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of funds to the enterprises.

Suggest Corrections

Similar questions

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.

Cash proceeds from issue of debentures, loans, bonds and other short/ long-term borrowings will result in cash ___ from financing activities.

Q. In a statement of cash flows, a company investing in short-term financing investments and in fixed assets results in ______________.

From the following information, calculate Cash Flow from Financing Activities:

	1st April, 2018 (₹)		31st March, 2019 (₹)
Long-term Loan	2,00,000		2,50,000

During the year, the company repaid a loan of ₹1,00,000.

Join BYJU'S Learning Program