Cash flow from Financing Activities includes : (A) Issue of Equity sh…

The correct answer is Option (2) → (B), (C) and (D) Only

Financing activities change the size and make-up of the owners’ capital and borrowings; a transaction with no cash is left out of the cash flow statement.

(A) Issue of Equity shares to promoters — False. Shares given to promoters for their services bring in no cash; a transaction that needs no cash is excluded from the cash flow statement.

(B) Redemption of Preference shares at premium — True. Repaying preference share capital reduces owners’ capital: a financing outflow.

(C) Interest on debenture paid — True. The book lists interest paid on debentures as a financing outflow.

(D) Raising funds by issuing 9% Debentures — True. Cash from issuing debentures is a financing inflow.

(E) Payment for purchase of Equity shares — False. Buying shares of other companies is an investing activity.