Match List – I with List – II. List - I List - II (A) Cash outflow fr… | Accountancy Part B CUET question

Match List – I with List – II.

List - I	List - II
(A) Cash outflow from Financing Activities	(I) Redemption of debentures
(B) Cash inflow from Operating Activities	(II) Current Investment
(C) Cash and Cash Equivalents	(III) Cash from royalties, fees, commissions and other revenues
(D) Cash inflow from Investing Activities	(IV) Cash receipt from disposal of fixed assets including intangibles

Choose the correct answer from the options given below.

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A)-(I), (B)-(III), (C)-(II), (D)-(IV)

Each item is placed by asking what the cash is for: running the main business (operating), buying or selling long-term assets and investments (investing), or dealing with the providers of long-term funds (financing). Cash equivalents are not an activity at all but part of “cash” itself.

(A) Cash outflow from financing activities — (I) Redemption of debentures.
Repaying debenture holders returns long-term borrowed funds, so it is a financing outflow.

(B) Cash inflow from operating activities — (III) Cash from royalties, fees, commissions and other revenues.
These are revenues earned in the normal course of business, so they are operating inflows.

(C) Cash and cash equivalents — (II) Current investment.
Short-term, highly liquid investments that can be turned into a known amount of cash at once are treated as cash equivalents.

(D) Cash inflow from investing activities — (IV) Cash receipt from disposal of fixed assets including intangibles.
Selling long-term assets brings cash in from investing activities.

NCERT (2026-27 edition):
Classification of Activities for the Preparation of Cash Flow Statement

Extract from the NCERT textbook

NCERT (2026-27 edition):
Cash and Cash Equivalents – “… As per AS-3, ‘Cash’ comprises cash in hand and demand deposits with banks, and ‘Cash equivalents’ means short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. An investment normally qualifies as cash equivalents only when it has a short maturity, of say, three months or less from the date of acquisition.”