Practicing Success
Practicing Success
CUET Preparation Today
There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below. Assertion (A): Buy-back of equity shares comes under financing activities of the cash flow statement. |
Both (A) and (R) are true, and (R) is the correct explanation of (A). Both (A) and (R) are true, but (R) is not the correct explanation of (A). (A) is false, but (R) is true. (A) is true, but (R) is false. |
Both (A) and (R) are true, and (R) is the correct explanation of (A). |
| Financing activities relate to long-term funds or capital of an enterprise, e.g., cash proceeds from the issue of equity shares, debentures, raising long-term bank loans, repayment of bank loans, etc. As per AS-3, financing activities are activities that result in changes in the size and composition of the owners’ capital (including preference share capital in case of a company) and borrowings of the enterprise. Separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of funds ( both capital and borrowings ) to the enterprise. |
