Accountancy Part BCash Flow Statement

Match List I with List II LIST I LIST II A. Operating Activities I. D…

Match List I with List II

LIST I	LIST II
A. Operating Activities	I. Depreciation
B. Investing Activities	II. Cash Paid to Supplier
C. Financing Activities	III. Sale of Land
D. Non Cash item	IV. Increase in Share Capital

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → A-II, B-III, C-IV, D-I

A cash flow statement sorts cash flows by the activity that causes them:

(A) Operating Activities — this matches (II) Cash Paid to Supplier. Paying suppliers for inventory is part of the main revenue-producing work.

(B) Investing Activities — this matches (III) Sale of Land. Sale of property, plant and equipment is an investing inflow.

(C) Financing Activities — this matches (IV) Increase in Share Capital. Cash raised by issuing shares changes the owners’ capital.

(D) Non Cash item — this matches (I) Depreciation. Depreciation is charged to profit but no cash goes out, so it is added back to the net profit.

NCERT (2026-27 edition):
Classification of Activities for the Preparation of Cash Flow Statement

Extract from the NCERT textbook

NCERT (2026-27 edition):
Indirect Method – “… However, Statement of Profit and Loss is prepared on accrual basis (and not on cash basis). Moreover, it also includes certain non-operating items such as interest paid, profit/loss on sale of fixed assets, etc.) and non-cash items (such as depreciation, goodwill written-off, divident declared, etc. Therefore, it becomes necessary to adjust the amount of net profit/loss as shown by Statement of Profit and Loss for arriving at cash flows from operating activities.”