Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

A part of fixed Assets costing ₹2,00,000 (Book value 1,50,000) was sold at a gain of ₹10,000. How it will affect the cash flow statement?

Options:

Inflow ₹1,60,000 in Investing Activities and Add ₹10,000 in Operating Activities

Inflow ₹1,60,000 in Investing Activities and less ₹10,000 in Operating Activities

Inflow ₹2,10,000 in Investing Activities Add ₹10,000 in Operating Activities

Inflow ₹2,10,000 in Investing Activities and Less ₹10,000 in Operating Activities

Correct Answer:

Inflow ₹1,60,000 in Investing Activities and less ₹10,000 in Operating Activities

Explanation:

Inflow ₹1,60,000 in Investing Activities as this is the sale value(150000 book value + 10000 gain).
₹10,000 in Operating Activities is deducted as it is not operating activity. This is non recurring in nature so gain on sale is deducted.