Question

Match List – I with List – II.

• A. (A)-(III), (B)-(IV), (C)-(I), (D)-(II)
• B. (A)-(III), (B)-(II), (C)-(I), (D)-(IV)
• C. (A)-(IV), (B)-(III), (C)-(I), (D)-(II)
• D. (A)-(I), (B)-(II), (C)-(III), (D)-(IV)

Hint:

Investment sale = Investing activity. Depreciation = Non-cash, added back to operating cash flow. Loan repayment = Financing activity. Increase in current assets = Deduction from operating cash flow.

Answer 1

The Correct Option is B

Within the cash flow statement, activities are classified as follows:
- (A) - (III): The sale of investments falls under investing activities due to its connection with the management of long-term assets.
- (B) - (II): Depreciation, a non-cash expense, is added back to operating activities to reconcile profit with cash flow.
- (C) - (I): The repayment of long-term borrowings is categorized as a financing activity, reflecting the management of the entity's capital structure.
- (D) - (IV): An increase in current assets leads to a reduction in operating cash flow and is therefore deducted.