Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

Select the amount of net Cash Flow from Investing activities on the basis of following information, for the year ending on March 31st, 2023.

Machinery as on April 1st, 2022 ₹ 50,000
Machinery as on March 31st, 2023 ₹ 60,000

During the year, machine costing ₹25,000 with accumulated depreciation of ₹ 15,000 was sold for ₹10,000

Options:

₹10,000 inflow

₹15,000 outflow

₹ 20,000 inflow

₹ 25,000 outflow

Correct Answer:

₹ 25,000 outflow

Explanation:

The correct answer is Option (4) → ₹ 25,000 outflow

Sale of Machinery 10,000
Less: Purchase of Machinery (35,000)
Net cash used in Investing Activities= 35000 -10000 = (25,000)
As figure is given in bracket shown negative or outflow in accounting so correct ans will be (25000).

Machinery Account

Particulars

J.F.

Amount(₹)

Particulars

J.F.

Amount(₹)

Balance b/d

 

50,000

Cash (proceeds from sale of machine)

 

 10,000

Statement of Profit and Loss
(profit on sale of machinery)

 0

Accumulated Depreciation

15,000

Cash (balancing figure:new machinery purchased)

35000

Balance c/d

 60,000

 

85,000

 

85,000

 

Machinery cost which is sold = 25000
Accumulate depreciation on this = 15000
Sale value = 10000
This is Sold for 10000 means there is no profit no loss.