Accountancy Part BCash Flow Statement

While preparing cash flow statement, purchase of goodwill is treated…

While preparing cash flow statement, purchase of goodwill is treated as:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Investing activity

Goodwill is an intangible fixed asset. Cash paid to acquire a fixed asset, tangible or intangible, is a cash outflow from investing activities.

NCERT (2026-27 edition):
Test your Understanding – I

Extract from the NCERT textbook

NCERT (2026-27 edition):
Cash Outflows from investing activities – “Cash payments to acquire fixed assets including intangibles and capitalised research and development.”