Accountancy Part BCash Flow Statement

Select the item of investing activities :

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Purchase of furniture

Investing activities are the acquisition and disposal of long-term assets and investments. Furniture is a fixed asset, so cash paid to buy it is an outflow from investing activities.

Option (1) Issue of shares — Incorrect. Raising capital by issuing shares is a financing activity.

Option (2) Revenue from operations — Incorrect. Sales of goods and services are the main operating activity.

Option (4) Redemption of debentures — Incorrect. Repaying long-term borrowed funds is a financing activity.

NCERT (2026-27 edition):
Cash from Investing Activities – “As per AS-3, investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Investing activities relate to purchase and sale of long-term assets or fixed assets such as machinery, furniture, land and building, etc.”