Question

Shyam Sunder Ltd. is a financing company. Under which of the following activity will the amount of ‘Interest paid on loan’ be shown:

• A. Investing activity
• B. Financing activity
• C. Both Financing \& Operating activity
• D. Operating activity

Hint:

For non-financing companies, interest paid is classified as a financing activity. For financing companies, it falls under operating activities.

Answer 1

The Correct Option is D

Under AS-3 (Revised), financing companies treat interest paid as an operating activity, as it is directly linked to their primary business functions.