Which of the following is a financing activity while preparing a cash flow statement of the company?

A) Cash sales
B) Cash received from trade receivables
C) Purchase of building
D) Sale of building
E) Issue of share capital
F) Buy back of equity shares
G) Dividend paid
H) Interest paid on long-term debentures
I) Cash purchases
J) Cash paid to trade payables

Choose the correct answer from the options given below.

EFGH

The correct answer is option 3- EFGH.

A) Cash sales- Operating activity
B) Cash received from trade receivables- Operating activity
C) Purchase of building-Investing activity
D) Sale of building-Investing activity
E) Issue of share capital- Financing activity
F) Buy back of equity shares- Financing activity
G) Dividend paid- Financing activity
H) Interest paid on long-term debentures- Financing activity
I) Cash purchases- Operating activity
J) Cash paid to trade payables- Operating activity

Financing activities center around the management of long-term funds or capital within an enterprise. These activities involve actions such as acquiring or repaying capital and borrowings. These financial activities can significantly impact the size and structure of the owners' capital and liabilities. According to Accounting Standard 3 (AS-3), disclosing cash flows related to financing activities separately is essential because it aids in forecasting future claims on cash flows by the providers of funds, both those providing capital and those lending to the enterprise.