Identify the activity that results in cash flow from financing activities.
Answer & explanation
Correct answer: option 4
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.