T.S. Grewal Class 12 Vol 3 Chapter 5 Q.1 - Cash Flow Statement

Question 1

Identify the transactions as belonging to (i) Operating Activities, (ii) Investing Activities, (iii) Financing Activities, and (iv) Cash and Cash Equivalents: (a) Cash Sale of Goods; (b) Cash Received against Revenue from Services Rendered; (c) Cash Purchase of Goods; (d) Cash Paid against Services Taken; (e) Patents Purchased; (f) Marketable Securities; (g) Bank Overdraft; (h) Proceeds from Issue of Debentures; (i) Purchase of Shares; (j) Repayment of Long-term Loan; (k) Commission Received; (l) Redemption of Debentures; (m) Interest on Debentures; (n) Interest on Investments; (o) Income Tax Paid; (p) Income Tax Paid on Gain on Sale of Asset; (q) Cash Received from Debtors; (r) Cash Paid to Creditors.

Solution

Operating Activity	Investing Activity	Financing Activity	Cash and Cash Equivalents
a. Cash Sale of Goods	e. Patents Purchased	g. Bank Overdraft	f. Marketable Securities
b. Cash Received against Revenue from Services Rendered	i. Purchase of Shares	h. Proceeds from Issue of Debentures
c. Cash Purchase of Goods	n. Interest on Investments	j. Repayment of Long-term Loan
d. Cash Paid against Services Taken	p. Income Tax Paid on Gain on Sale of Asset	l. Redemption of Debentures
k. Commission Received		m. Interest on Debentures
o. Income Tax Paid
q. Cash Received from Debtors
r. Cash Paid to Creditors

Note: Income tax is ordinarily classified as an operating activity, unless it can be specifically identified with a financing or investing activity, in which case it is classified accordingly — hence tax paid on the gain from a sale of asset is classified as an Investing Activity.