From the following information, calculate net cash inflow or net cash outflow from financing activities:
Long-term Loans April 1, 2016 Rs. 2,00,000
Long-term Loans March 31, 2017 Rs. 2,50,000
During the year, the company repaid a loan of Rs. 1,00,000.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 50,000 Inflow
Long-term loans are a source of long-term funds, so raising them and repaying them are both financing activities. The new loan raised during the year is not given; it is found from the change in the balance after allowing for the repayment.
Opening balance of long-term loans = Rs. 2,00,000
Less: loan repaid during the year = Rs. 1,00,000
Balance left of the old loans = Rs. 1,00,000
Closing balance = Rs. 2,50,000
New loan raised (inflow) = Rs. 2,50,000 − Rs. 1,00,000 = Rs. 1,50,000
Repayment of long-term borrowings (outflow) = Rs. 1,00,000
Net cash flow from financing activities = Rs. 1,50,000 − Rs. 1,00,000 = Rs. 50,000 inflow
Taking only the change in balance (Rs. 50,000) happens to give the same net figure here, but the statement must show the Rs. 1,50,000 raised and the Rs. 1,00,000 repaid separately.
NCERT (2026-27 edition):
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