Match List – I with List – II. List - I List - II (A) Sale of Investm… | Accountancy Part B CUET question

Match List – I with List – II.

List - I	List - II
(A) Sale of Investment	(I) Financing Activity
(B) Depreciation written off	(II) Added to net profit to calculate cash flow from operating activities
(C) Repayment of Long-term borrowings	(III) Investing Activity
(D) Increase in Current Asset	(IV) Deducted from Operating Profit before working capital changes

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A)-(III), (B)-(II), (C)-(I), (D)-(IV)

(A) Sale of Investment — this matches (III) Investing Activity. Disposal of long-term investments is an investing cash inflow.

(B) Depreciation written off — this matches (II) Added to net profit to calculate cash flow from operating activities. It is a non-cash charge, so it is added back.

(C) Repayment of Long-term borrowings — this matches (I) Financing Activity. It changes the long-term funds of the enterprise.

(D) Increase in Current Asset — this matches (IV) Deducted from Operating Profit before working capital changes. More cash is tied up in current assets.

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. Transactions related to long-term investment are also investing activities.”

NCERT (2026-27 edition):
Ascertaining Cash Flow from Operating Activities – “… As per AS-3, under indirect method, net cash flow from operating activities is determined by adjusting net profit or loss for the effect of : Non-cash items such as depreciation, goodwill written-off, provisions, deferred taxes, etc., which are to be added back.”

NCERT (2026-27 edition):
Cash from Financing Activities – “As the name suggests, financing activities relate to long-term funds or capital of an enterprise, e.g., cash proceeds from issue of equity shares, debentures, raising long-term bank loans, repayment of bank loan, etc.”

NCERT (2026-27 edition):
Ascertaining Cash Flow from Operating Activities – “… Other important adjustments relate to changes in working capital which are necessary (i.e., items of current assets and current liabilities) to convert net profit/loss which is based on accrual basis into cash flows from operating activities. Therefore, the increase in current assets and decrease in current liabilities are deducted from the operating profit, and the decrease in current assets and increase in current liabilities are added to the operating profit so as to arrive at the exact amount of net cash flow from operating activities.”