Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

Capital gain tax paid by the company on sale of land held as Investment is:

Options:

An outflow under Operating activity

An outflow under Investing activity

An Inflow under Financing Activity

An outflow under Financing activity

Correct Answer:

An outflow under Investing activity

Explanation:

The correct answer is Option (2) - An outflow under Investing activity.

The payment of capital gains tax on the sale of an investment, such as land held for investment purposes, can be classified as part of the cash outflow under investing activities.