CUET Preparation Today
Identify the activity that results in cash flow from financing activities. |
Interest received in cash from loans and advances Conversion of debentures into shares Cash payments for insurance premiums Interest paid on debentures |
Interest paid on debentures |
The correct answer is Option (4) → Interest paid on debentures. Interest paid on debentures- It is a financing activity. Cash paid as interest on debentures is considered a cash flow from financing activities. It represents the cost of borrowing funds, which is related to the company's financing.
OTHER OPTIONS * Interest received in cash from loans and advances- It is an investing activity. * Conversion of debentures into shares- It is non cash activity so not included in cash flow statement. * Cash payments for insurance premiums- It is an operating activity. |
