Accountancy Part BCash Flow Statement

Calculate cash flow from financing Activities of X Ltd. which is a fi…

Calculate cash flow from financing Activities of X Ltd. which is a financing company.

Issue of shares	₹1,00,000
Issue of Bonus shares	₹50,000
Dividend paid	₹10,000
Interest paid	₹5,000

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → ₹90,000

For a financial enterprise, lending and borrowing is the main business, so interest paid is an operating activity; dividend paid is still a financing activity. An issue of bonus shares brings in no cash, so it is left out of the cash flow statement.

Issue of shares (inflow) = ₹1,00,000
Dividend paid (outflow) = ₹10,000
Cash flow from financing activities = ₹1,00,000 − ₹10,000 = ₹90,000

Deducting the interest as well (₹85,000) treats the company as a non-financial one, and adding the bonus issue (₹1,35,000) counts a non-cash item.

NCERT (2026-27 edition):
Interest and Dividend – “… In case of a financial enterprise (whose main business is lending and borrowing), interest paid, interest received and dividend received are classified as operating activities while dividend paid is a financing activity.”

NCERT (2026-27 edition):
Non-cash Transactions – “… As per AS-3, investing and financing transactions that do not require the use of cash or cash equivalents should be excluded from a cash flow statement.”