Match List – I with List – II.
|
List - I |
List - II |
|
(A) Purchase of Building |
(I) Financing activity |
|
(B) Change in inventory |
(II) Cash and cash equivalents |
|
(C) Cash in hand |
(III) Investing activity |
|
(D) Dividend paid |
(IV) Operating activity |
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A)-(III), (B)-(IV), (C)-(II), (D)-(I)
|
List - I |
List - II |
|
(A) Purchase of Building |
(III) Investing activity |
|
(B) Change in inventory |
(IV) Operating activity |
|
(C) Cash in hand |
(II) Cash and cash equivalents |
|
(D) Dividend paid |
(I) Financing activity |
* Purchase of Building - Investing activity. The purchase of a building is generally classified as an investing activity because it involves the acquisition of a long-term asset that is not part of the day-to-day operations of the business.
* Change in inventory - Operating activity. Changes in inventory are typically classified as operating activities since they relate to the core operations of the business. An increase in inventory consumes cash (outflow), while a decrease generates cash (inflow).
* Cash in hand - Cash and cash equivalents. Cash in hand is part of the cash and cash equivalents.
* Dividend paid - Financing activity. Payment of dividends is usually classified as a financing activity. It involves distributing profits to the shareholders, representing a return on their investment and is considered a financing outflow.