The correct answer is Option (3) - A-II, B-I, C-IV, D-III.
* Employee benefit expenses- Operating activity.
Operating activities are the activities that constitute the primary or main activities of an enterprise. For example, for a company manufacturing garments, operating activities are procurement of raw material, incurrence of manufacturing expenses, sale of garments, etc. These are the principal revenue generating activities (or the main activities) of the enterprise and these activities are not investing or financing activities. Employee benefits expenses is cash outflow.
* Dividend received- Investing activity.
As per AS-3, investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Investing activities relate to purchase and sale of long-term assets or fixed assets such as machinery, furniture, land and building, etc. Transactions related to long term investment are also investing activities. Separate disclosure of cash flows from investing activities is important because they represent the extent to which expenditures have been made for resources intended to generate future income and cash flows. Cash Inflows from Investing Activities are as follows-
* Cash receipt from disposal of fixed assets including intangibles.
* Cash receipt from the repayment of advances or loans made to third parties (except in case of financial enterprise).
* Cash receipt from disposal of shares, warrants or debt instruments of other enterprises except those held for trading purposes.
* Interest received in cash from loans and advances.
* Dividend received from investments in other enterprises.
* Loan raised- Financing activity
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. Separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of funds (both capital and borrowings) to the enterprise.
* Proceeds from earthquake disaster management - Extraordinary item.
Proceeds are considered an unusual and infrequent occurrence that is not expected to recur frequently in the normal course of business. Extraordinary items are typically disclosed separately in financial statements to provide a clearer picture of the company's regular operating performance. |
