Calculate and state the nature of activity under cash flow statement:
Acquired Machinery for ₹5,00,000 paying 50% by cheque and executing a bond for the balance payable:
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Outflow Investing activity (2,50,000).
Only 50% amount is paid by cheque so only this amount will be the outflow of cash.
50% of ₹5,00,000 = ₹2,50,000.
Acquiring machinery is an investing activity. So there will be outflow of ₹2,50,000 through investing activity.