Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Cash Flow Statement

Question:

Identify the amount of net cash flow from financing activities on the basis of following Information :

 Particulars

 1st April 2022 
(₹)

 31st March 2023 
(₹)

 Equity Share Capital 

28,00,000

35,00,000

 Bank Loan

12,50,000

5,50,000

Bank loan raised during the year ₹2,00,000.

Options:

₹2,00,000 inflow

₹4,00,000 inflow

₹2,00,000 outflow

No flow of cash

Correct Answer:

No flow of cash

Explanation:

The correct answer is Option (4) - No flow of cash.

Equity share capital increased means it is a cash inflow.
Cash inflow from equity share capital = 35,00,000 - 28,00,000
                                                      = 7,00,000

 

Bank loan A/c

Particulars Amount Particulars Amount
To Bank A/c
(Payment of loan)
9,00,000 By Bal b/d 12,50,000
To Bal c/d 5,50,000 By Bank A/c
(Loan raised)
2,00,000
  14,50,000   14,50,000

Cash flow from bank loan = Outflow by paying loan - Inflow from raising of loan 
                                      = 9,00,000 - 2,00,000
                                      = 7,00,000 (outflow)

 

Net Cash flow from financing activity = Cash inflow from equity - Cash outflow from bank loan
                                                      = 7,00,000 - 7,00,000
                                                      = 0

Net cash flow is 0 means there is no flow of cash from financing activity.

 

**** It is the previous year question.  The correct ans is no flow of cash and there is no such option in the question, so we changed the 4th option.