Which of the following activities come under the head of 'financing activities'?
A) Purchase of shares
B) Dividend payable on equity shares
C) Issue of 9% debentures
D) Redemption of preference shares
E) Interest paid on debentures
Choose the correct answer from the options given below.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → C, D & E only
Financing activities change the size and make-up of the owners’ capital (preference capital included) and borrowings, and include interest and dividends paid by a non-financial company.
(A) Purchase of shares — False. Buying shares of other companies is an investment: an investing activity.
(B) Dividend payable on equity shares — False. A dividend still payable has not been paid; there is no cash flow. Only dividend paid is a financing outflow.
(C) Issue of 9% debentures — True. Cash raised from borrowings is a financing inflow.
(D) Redemption of preference shares — True. Repaying preference capital changes the owners’ capital: a financing outflow.
(E) Interest paid on debentures — True. Interest paid on borrowings is a financing outflow.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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