Identify the transactions where there would be no flow of cash :

(A) Amortisation of goodwill
(B) Redemption of Debentures by Conversion
(C) Machinery purchased and payment by cash
(D) Issue of shares for cash
(E) Issue of fully paid bonus shares

Choose the correct answer from the options given below :

(A), (B) and (E) only

The correct answer is Option (3) - (A), (B) and (E) only.

(A) Amortisation of goodwill- This is a non cash item. Intangible assets are amortised and there is no use of cash in it.

(B) Redemption of Debentures by Conversion- This is a non cash item. Debentures are converted into any other securities. There is no use of cash.

(C) Machinery purchased and payment by cash- This is a cash item. Machinery purchased in cash is an investing activity and include outflow of cash for the purchase of machinery.

(D) Issue of shares for cash- This is a cash item. Shares are issued to raise finance. It is a financing activity.

(E) Issue of fully paid bonus shares- This is a non cash item. The issuance of bonus shares does not involve cash flow. It is a form of distribution of profits to existing shareholders in the form of additional shares without any cash consideration. It doesn't impact the cash flow statement directly.