Accountancy Part BCash Flow Statement

A company acquired machinery for ₹2,50,000 by paying 20% by cheque an…

A company acquired machinery for ₹2,50,000 by paying 20% by cheque and accepting a bond for the balance payable after 5 years. The result is:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → ₹50,000 outflow from Investing Activity

Cost of machinery = ₹2,50,000

Paid by cheque = 20% of ₹2,50,000 = ₹50,000 (cash outflow; purchase of a fixed asset = investing activity)

Balance ₹2,00,000 settled by a bond = a non-cash transaction, left out of the cash flow statement

NCERT (2026-27 edition):
Numerical Questions

Extract from the NCERT textbook

NCERT (2026-27 edition):
Non-cash Transactions – “… As per AS-3, investing and financing transactions that do not require the use of cash or cash equivalents should be excluded from a cash flow statement.”