Question:
Statement I: 'Issue of fully paid bonus shares out of Securities Premium Account' will result in inflow of cash.
Statement II: 'Cash withdrawn from bank' will result in inflow of cash.
In the context of the above two statements, choose the correct option:
Statement I: 'Issue of fully paid bonus shares out of Securities Premium Account' will result in inflow of cash.
Statement II: 'Cash withdrawn from bank' will result in inflow of cash.
In the context of the above two statements, choose the correct option:
Statement II: 'Cash withdrawn from bank' will result in inflow of cash.
In the context of the above two statements, choose the correct option:
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Bonus shares do not impact cash flow as they are an internal transfer. Similarly, withdrawing cash from a bank is a movement within cash accounts, not an inflow or outflow.
Updated On: Jan 13, 2026
- Both statement I and statement II are correct
- Both statement I and statement II are incorrect
- Statement I is correct and statement II is incorrect
- Statement I is incorrect and statement II is correct
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The Correct Option is B
Solution and Explanation
Statement I is incorrect because issuing bonus shares from securities premium does not result in inflow of cash, as it involves a transfer from one account (securities premium) to another (share capital).
Statement II is incorrect because cash withdrawn from a bank does not result in inflow of cash; it simply transfers cash from the bank to the business and does not affect the total cash position.
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