‘Payment of Dividend’ will come under what type of activity while preparing Cash Flow Statement?
Show Hint
- Operating activity
- Investing activity
- Financing activity
- None of these
The Correct Option is C
Solution and Explanation
AS-3 / Ind AS 7 classify cash flows into Operating (core business), Investing (buying/selling long-term assets), and Financing (transactions with owners/lenders that change capital structure).
Step 2: Place dividend payment in the right category:
Paying a dividend is a return to the company's owners (shareholders) on the capital they supplied — it changes the size/composition of owners' funds, which is exactly what a Financing activity covers.
Final Answer:
Payment of dividend is a Financing activity.
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From the following information, prepare Cash Flow Statement from the operating activities:
Items Rs. Net profit of current year 1,00,000 Transfer to general reserve 10,000 Decrease in debtors 25,000 Decrease in bills payable 20,000 Discount on shares written off 5,000 Increase in stock 18,000 Loss on sale of machine 12,000 Profit on sale of investment 4,000
\[ \text{Cash Flow from Operating Activities} \] \[ \begin{array}{|l|r|} \hline \textbf{Particulars} & \textbf{Rs.} \\ \hline \text{Net Profit before Adjustments} & 1,00,000 \\ \hline \text{Add: Decrease in Debtors} & 25,000 \\ \text{Add: Profit on Sale of Investment} & 4,000 \\ \hline \text{Less: Transfer to General Reserve} & (10,000) \\ \text{Less: Decrease in Bills Payable} & (20,000) \\ \text{Less: Discount on Shares Written Off} & (5,000) \\ \text{Less: Increase in Stock} & (18,000) \\ \text{Less: Loss on Sale of Machine} & (12,000) \\ \hline \text{Net Cash Flow from Operating Activities} & 64,000 \\ \hline \end{array} \]- Which accounting standard is related to cash flow statement?
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The following is the position of current assets and current liabilities of Z Ltd.:
\[\begin{array}{|l|r|r|} \hline Items & March, 2022 (Rs.) & March, 2023 (Rs.) \\ \hline \text{Provision for doubtful debts} & \text{1,000} & \text{--} \\ \hline \text{Short-term loans} & \text{10,000} & \text{19,000} \\ \hline \text{Creditors} & \text{15,000} & \text{10,000} \\ \hline \text{Bills payable} & \text{20,000} & \text{40,000} \\ \hline \end{array}\]
The company incurred a loss of Rs. 45,000 during the year. Calculate cash from operating activities.
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