Match List I with List II List I List II A. Goodwill written off I. C…

Match List I with List II

List I	List II
A. Goodwill written off	I. Cash and Cash Equivalents
B. Proceeds from sale of fixed assets	II. Financing Activities
C. Current Investments	III. Operating Activities
D. Redemption of debenture	IV. Investing Activities

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → A-III, B-IV, C-I, D-II

(A) Goodwill written off — this matches (III) Operating Activities. It is a non-cash charge added back to the net profit while working out cash from operating activities.

(B) Proceeds from sale of fixed assets — this matches (IV) Investing Activities. Disposal of long-term assets is an investing inflow.

(C) Current Investments — this matches (I) Cash and Cash Equivalents. Short-term, highly liquid investments readily convertible into cash are treated as cash equivalents.

(D) Redemption of debenture — this matches (II) Financing Activities. Repaying long-term borrowings changes the borrowings of the enterprise.

NCERT (2026-27 edition):
Classification of Activities for the Preparation of Cash Flow Statement

Extract from the NCERT textbook

NCERT (2026-27 edition):
Indirect Method – “… However, Statement of Profit and Loss is prepared on accrual basis (and not on cash basis). Moreover, it also includes certain non-operating items such as interest paid, profit/loss on sale of fixed assets, etc.) and non-cash items (such as depreciation, goodwill written-off, divident declared, etc. Therefore, it becomes necessary to adjust the amount of net profit/loss as shown by Statement of Profit and Loss for arriving at cash flows from operating activities.”

NCERT (2026-27 edition):
Cash and Cash Equivalents – “… As per AS-3, ‘Cash’ comprises cash in hand and demand deposits with banks, and ‘Cash equivalents’ means short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.”