Accountancy Part BCash Flow Statement

Match List I with List II List I(Items of cash flow) List II(Type of…

Match List I with List II

List I (Items of cash flow)	List II (Type of activity)
A. Purchase of Tangible asset	I. Operating activity
B. Issue of shares	II. Cash & Cash equivalents
C. Increase in current assets	III. Investing activity
D. Marketable securities	IV. Financing activity

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → A-III, B-IV, C-I, D-II

A. Purchase of Tangible asset — this matches III. Investing activity. Cash spent on fixed assets such as machinery is an investing outflow.

B. Issue of shares — this matches IV. Financing activity. It changes the size of the owners’ capital.

C. Increase in current assets — this matches I. Operating activity. It is a working capital change, deducted from operating profit under the indirect method.

D. Marketable securities — this matches II. Cash & Cash equivalents. They are short-term, highly liquid investments readily convertible into cash.

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

Extract from the NCERT textbook

NCERT (2026-27 edition):
Indirect Method – “… Therefore, the increase in current assets and decrease in current liabilities are deducted from the operating profit, and the decrease in current assets and increase in current liabilities are added to the operating profit so as to arrive at the exact amount of net cash flow from operating activities.”