Which of the following would not be considered a non-cash investing and financing activity in preparing a statement of cash flows?

Withdrawal of cash by the owner of a business

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Issuance of common stock to retire long-term debt

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Acquisition of a manufacturing plant by issuing bonds

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Issuance of common stock in exchange for convertible preferred stock

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Solution

The correct option is A Withdrawal of cash by the owner of a business
As per AS-3, investing and financing transactions that do not require the use of cash or cash equivalents should be excluded from a cash flow statement. Such transactions should be disclosed elsewhere in the financial statements in a way that provide all the relevant information about these investing and financing activities. Examples of such transactions are - acquisition of machinery by issue of equity shares, or redemption of debentures by issue of equity shares.

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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

Usama Ali Khan Company experienced the following at end of year, December 2017:

Required: Calculate the Net Cash Flow From Financing Activities.

235000
255000
270000
265000

Q. Which of the following is a non-cash investing and financing activity?

Which of the following would be considered a cash-flow item from a "financing" activity?

'Interest received and paid' is considered as which type of activity by a finance company while preparing a Cash Flow Statement ?

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