Consider the following facts related to Cash Flow Statement and selec…

The correct answer is Option (4) → (A), (B) and (D) only

(A) Extra ordinary items are non-recurring in nature. — True. Items like loss by theft or flood are not regular, so their cash flows are shown separately.

(B) Rent paid by a trading firm is an operating activity. — True. For a trading firm rent is a payment for a service used in running the business, an operating expense.

(C) Bank overdraft is an investing activity. — False. An overdraft is a short-term borrowing; bank overdraft is classified under financing activities.

(D) Rent received by a Real Estate based business unit is an operating activity. — True. Letting property is the main business of such a unit; the same item can be classified differently for different enterprises.

(E) In case of a Financial Enterprise, dividend paid is an operating activity. — False. For a financial enterprise, interest and dividend received are operating, but dividend paid is a financing activity.