When is dividend received considered as operating activity?
SOLUTION Dividend received in case of a finance company is considered as an operating activity.
Give two examples of ‘significant non-cash transactions’.
SOLUTION (i) Acquisition of fixed asset by issue of debentures or shares.(ii) Conversion of debentures into shares.
State why non-cash transactions are ignored while preparing a Cash Flow Statement?
SOLUTION Because Non-Cash transactions do not affect Cash whereas Cash Flow Statement show's only inflows and outflows of Cash and Cash equivalents.
Do you think that Bank deposit with 100 days of maturity will be included in Cash and Cash Equivalents? Give reason.
SOLUTION Bank deposit with 100 days of maturity will not be included in Cash and Cash Equivalents.Reason: Bank deposit with maturity period of 3 months or less are treated as…
State with reason whether ‘Short term deposits in Banks’ will result in inflow, outflow or no flow of cash.
SOLUTION No flow of cash because ‘Short term deposits in Banks’ is a part of cash equivalents.
While preparing cash flow statement, will ‘Cash withdrawn from Bank’ result into inflow, outflow or no flow of cash? Give reason in support of your answer. (C.B.S.E. 2020, Punjab)
SOLUTION No flow. Because there is no change in the amount of Cash and Cash Equivalents. It merely represents movement between items of Cash and Cash Equivalents.
State whether cash deposited in bank will result in inflow, outflow or no flow of cash?
SOLUTION No flow. Because there is no change in the amount of Cash and Cash Equivalents. Cash deposited in bank merely represents movement between items of cash and cash equivalents.
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