Question

Match List-I with List-II

List-I	List-II
(A) Receipt from royalties, fees, commission and other revenue	(I) Investing Activity
(B) Receipt from Interest and dividends	(II) Operating Activity
(C) Proceeds from issue of preference or equity shares	(III) Cash and Cash equivalent
(D) Current Investment	(IV) Financing Activity

Choose the correct answer from the options given below:

• (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
• (A) - (I), (B) - (II), (C) - (IV), (D) - (III)
• (A) - (II), (B) - (I), (C) - (IV), (D) - (III)
• (A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Hint:

Royalty is operating, interest and dividend received are investing, share issue is financing, current investment is a cash equivalent.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
A cash flow statement groups cash flows into operating, investing and financing activities. Some items are kept outside these as cash and cash equivalents. We place each item in the right group.

Step 2: Item (A):
Royalties, fees and commission are earned from the main business of the firm. So they are Operating Activity. This is (II).

Step 3: Item (B):
Interest and dividends are received on investments made by the firm. So they are Investing Activity (for a non-finance company). This is (I).

Step 4: Item (C):
Issue of preference or equity shares raises long-term capital from owners. So it is Financing Activity. This is (IV).

Step 5: Item (D):
Current investments are short-term, highly liquid investments that are easily turned into cash. So they are treated as Cash and Cash equivalent. This is (III).

Step 6: Check the options:
The correct order is A-II, B-I, C-IV, D-III. Option 1 pairs A with I, wrong. Option 2 pairs A with I, wrong. Option 3 matches all four. Option 4 pairs A with III, wrong.

Final Answer:
The correct matching is A-II, B-I, C-IV, D-III, which is option 3. \[\boxed{3}\]