Accountancy Part BCash Flow Statement

Financing Activities include : (A) Purchase of Investment (B) Proceed…

Financing Activities include :

(A) Purchase of Investment
(B) Proceed from Long term borrowings
(C) Repayment of Bank Loan
(D) Payment of Dividend
(E) Sale of Investments

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (B), (C) and (D) only

Financing activities change the size and make-up of the owners’ capital and the borrowings of the enterprise; investing activities are buying and selling long-term assets and investments.

(A) Purchase of Investment — False. Buying investments is an investing activity.

(B) Proceed from Long term borrowings — True. Raising a long-term loan increases borrowings, a financing inflow.

(C) Repayment of Bank Loan — True. Repaying borrowed money is a financing outflow.

(D) Payment of Dividend — True. Dividend is the return to the providers of owners’ capital, a financing outflow.

(E) Sale of Investments — False. Selling investments is an investing activity.

NCERT (2026-27 edition):
Cash from Financing Activities – “As the name suggests, financing activities relate to long-term funds or capital of an enterprise, e.g., cash proceeds from issue of equity shares, debentures, raising long-term bank loans, repayment of bank loan, etc. As per AS-3, financing activities are activities that result in changes in the size and composition of the owners’ capital (including preference share capital in case of a company) and borrowings of the enterprise.”

NCERT (2026-27 edition):
Cash from Financing Activities

Extract from the NCERT textbook

NCERT (2026-27 edition):
Cash from Investing Activities – “As per AS-3, investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents.”