Question:
\(\textit{Statement I:}\) In case of non-financial enterprises, payment of interest and dividends are classified as financing activities, whereas receipt of interest and dividends are classified as investing activities.
\(\textit{Statement II:}\) Investing and financing transactions that require the use of cash or cash equivalents, should be excluded from cash flow statement.
Choose the correct alternative from the following:
\(\textit{Statement I:}\) In case of non-financial enterprises, payment of interest and dividends are classified as financing activities, whereas receipt of interest and dividends are classified as investing activities.
\(\textit{Statement II:}\) Investing and financing transactions that require the use of cash or cash equivalents, should be excluded from cash flow statement.
Choose the correct alternative from the following:
Show Hint
Always differentiate between cash-based and non-cash investing/financing activities when preparing Cash Flow Statements.
Updated On: Jan 31, 2026
- Both the statements are false.
- Both the statements are true.
- Statement I is false and Statement II is true.
- Statement I is true and Statement II is false.
Show Solution
Verified By Collegedunia
The Correct Option is D
Solution and Explanation
Statement I is true because according to AS-3 (Revised), for non-financial companies, interest paid and dividends paid are shown under financing activities, and interest/dividends received under investing.
Statement II is false because investing and financing activities requiring cash or cash equivalents are included in cash flow statements. Only non-cash transactions are excluded.
Statement II is false because investing and financing activities requiring cash or cash equivalents are included in cash flow statements. Only non-cash transactions are excluded.
Was this answer helpful?
1
0
Top CBSE CLASS XII Accountancy Questions
From the following Balance Sheet of Hira Ltd. as at 31st March, 2023, prepare Comparative Balance Sheet:
- On 1st May, 2023, Amrit Ltd. issued 10,000, 10% debentures of ₹100 each at a premium of 10%, redeemable at a premium of 10%. Loss on issue of debentures will be:
- Gupta and Sharma are partners in a firm sharing profit in the ratio of 4:1. They admitted Preeti as a new partner for \( \frac{1}{4} \) share in the profits, which she acquired wholly from Gupta. The new profit sharing ratio of Gupta, Sharma, and Preeti will be:
- On the dissolution of a partnership firm, there were debtors of ₹34,000. Debtors of ₹1,000 became bad, and 60% was realized from the remaining debtors. Which account will be debited and by how much amount on the realization from debtors?
- If vendors are issued fully paid shares of ₹1,25,000 in purchase consideration of net assets of ₹1,50,000, the balance of ₹25,000 will be credited to:
View More Questions
Top CBSE CLASS XII Cash Flow Statement Questions
- From the following details, calculate Cash Flow from Investing Activities: - Purchase of Machinery Rs 1,50,000
- Sale of Land Rs 80,000
- Purchase of Investments Rs 50,000
- Interest received Rs 8,000
- Which of the following transactions will result in ‘Cash Flows from Operating Activities’?
- ‘Sale of Patents’ will result in:
- Statement I: Sale of marketable securities will result in flow of cash.
Statement II: Cash flow implies movement of cash in and out due to some non-cash items.
Choose the correct option from the following: From the following information extracted from the books of Kant Ltd., calculate ‘Cash Flows from Operating Activities’.
View More Questions
Top CBSE CLASS XII Questions
- 2, b, c are in A.P. and the range of determinant $\begin{vmatrix}1&1&1\\ 2&b&c\\ 4&b^{2}&c^{2}\end{vmatrix}$ is [2, 16]. Then find range of c is
- A boy of mass 50 kg is standing at one end of a, boat of length 9 m and mass 400 kg. He runs to the other, end. The distance through which the centre of mass of the boat boy system moves is
- A capillary tube of radius r is dipped inside a large vessel of water. The mass of water raised above water level is M. If the radius of capillary is doubled, the mass of water inside capillary will be
- A circular disc is rotating about its own axis. An external opposing torque 0.02 Nm is applied on the disc by which it comes rest in 5 seconds. The initial angular momentum of disc is
- A circular disc is rotating about its own axis at uniform angular velocity \(\omega.\) The disc is subjected to uniform angular retardation by which its angular velocity is decreased to \(\frac {\omega}{2}\) during 120 rotations. The number of rotations further made by it before coming to rest is
View More Questions