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Home Questions 9SR8P3XEKR
Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

Match the following for an enterprise while making a cash flow statement.

LIST 1 LIST 2
A) Proposed dividend for the current year I) Cash outflow
B) Purchase of patents II) Cash inflow
C) Issue of debentures for the purchase of machinery III) No effect
D) Sale of goods costing ₹20,000 for ₹25,000 IV) Contingent liability
Options:

A-IV, B-III, C- I, D-II

A- IV, B- I, C- II, D-III

A- II, B-I, C-III, D-IV

A-IV, B-I, C-III, D-II

Correct Answer:

A-IV, B-I, C-III, D-II

Explanation:

The correct answer is option 4- A-IV, B-I, C-III, D-II.

LIST 1 LIST 2
A) Proposed dividend for the current year IV) Contingent liability
B) Purchase of patents I) Cash outflow
C) Issue of debentures for the purchase of machinery III) No effect
D) Sale of goods costing ₹20000 for ₹25000 II) Cash inflow

 

* Proposed dividend for the current year- As per AS-4, Contingencies and Events Occurring after the Balance Sheet Date, Proposed dividend is shown in the Notes to Accounts. It will be shown as contingent liability since it becomes a liability after it is declared (approved) by the shareholders.

* Purchase of patents- Patents are purchased which is an investing activity and purchases makes the cash outflow.

* Issue of debentures for the purchase of machinery- No effect because machinery was purchased for debentures.

* Sale of goods costing ₹20,000 for ₹25,000- The purchase makes cash outflow whereas sale makes cash inflow in the company.

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