Match List – I with List – II.
|
List - I |
List - II |
|
(A) Sale of Investment |
(I) Financing Activity |
|
(B) Depreciation written off |
(II) Added to Calculate Operating Activities |
|
(C) Repayment of Long-term borrowings |
(III) Investing Activity |
|
(D) Increase in Current Asset |
(IV) Deducted from Operating Profit |
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)
|
List - I |
List - II |
|
(A) Sale of Investment |
(III) Investing Activity |
|
(B) Depreciation written off |
(II) Added to Calculate Operating Activities |
|
(C) Repayment of Long-term borrowings |
(I) Financing Activity |
|
(D) Increase in Current Asset |
(IV) Deducted from Operating Profit |
(A) Sale of Investment - Investing Activity.- This is classified as a cash flow from investing activities. It represents cash received from selling investments.
(B) Depreciation written off - Added to calculate Operating Activities.- Depreciation is a non-cash expense and is added back to the operating profit to calculate cash flows from operating activities. Therefore, it is associated with operating activities.
(C) Repayment of Long-term borrowings- Financing Activity.- Repayment of long-term borrowings is considered a cash outflow from financing activities. It represents the cash used to pay back long-term debts.
(D) Increase in Current Asset - Deducted from Operating Profit before working capital changes.- An increase in current assets is deducted from operating profit before working capital changes to calculate cash flows from operating activities.