From the following information, calculate net cash inflow or net cash outflow from financing activities:
Long-term Loans April 1, 2016 ₹2,00,000
Long-term Loans March 31, 2017 ₹2,50,000
During the year, the company repaid a loan of ₹1,00,000.
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹50,000 Inflow.
- Opening balance of long-term loans = ₹2,00,000
- Closing balance = ₹2,50,000
Net increase in loans = ₹50,000
But during the year, the company repaid ₹1,00,000, which means:
- The company must have taken more loans to reach the closing balance.
So, New loan taken = Increase + Repayment
= 50,000 + 1,00,000
= ₹1,50,000
Net cash flow = Inflow − Outflow
= 1,50,000 - 1,00,000
= 50,000 (inflow)
LONG TERM LOAN A/c
| PARTICULARS | AMOUNT | PARTICULARS | AMOUNT |
| To cash A/c (loan paid) |
1,00,000 | By balance b/d | 2,00,000 |
| To balance c/d | 2,50,000 | By cash A/c (loan raised) (balancing figure) |
1,50,000 |
| 3,50,000 | 3,50,000 |