Surya Housing Finances Ltd gave ₹20,00,000 to Chand Construction House as cash advance. In the books of Surya Housing Finances Ltd. the transaction will lead to ________.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Cash Outflow from Operating Activities
Lending is the main business of a housing finance company, so cash advances and loans it makes are operating activities. Cash paid out to the borrower is an outflow.
Option (1) Cash Inflow from Operating Activities — Incorrect. The company pays out the money; it would be an inflow only on repayment.
Option (3) Cash Inflow from Financing Activities — Incorrect. Financing activities concern the company’s own capital and borrowings, not loans it gives.
Option (4) Cash Outflow from Financing Activities — Incorrect. Giving an advance is not repaying the company’s own borrowing or paying a return to its owners.
NCERT (2026-27 edition): |