Question

The transaction ‘Acquisition of machinery by issue of equity shares of \rupee5,00,00,000’ will result in:

• A. Cash inflow of \rupee5,00,00,000 from financing activities
• B. Cash outflow of \rupee5,00,00,000 from financing activities (3) Cash outflow of \rupee5,00,00,000 from investing activities (4) No flow of cash
• C.
• D.

Hint:

Non-cash transactions like acquiring assets through equity shares are disclosed as supplementary notes in the cash flow statement but do not affect cash inflow or outflow.

Answer 1

The Correct Option is D

This transaction, an acquisition of machinery via equity shares, is non-cash, thus involving no cash flow.