A company has its Fixed Assets 'opening and closing Balances', ₹50,000 and ₹1,50,000 respectively. Depreciation charged during the year was ₹20,000. Calculate the cash flow from investing activities?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹1,20,000 Outflow.
Purchases = Closing bal + Depreciation - Opening bal
= 1,50,000 + 20,000 - 50,000
= 1,20,000
As it is purchases so it is an outflow of cash for the investing activity.
FIXED ASSET A/c
| PARTICULARS | AMOUNT (₹) | PARTICULARS | AMOUNT (₹) |
| To Balance b/d | 50,000 | By Depreciation | 20,000 |
| To Bank A/c (Balancing fig. purchases) |
1,20,000 | By Balance c/d | 1,50,000 |
| 1,70,000 | 1,70,000 |