Accountancy Part BCash Flow Statement

Identify the activities that are to be recorded under Cash Flow from…

Identify the activities that are to be recorded under Cash Flow from Financing activities in Cash Flow Statement.

(A) Dividend received
(B) Proceeds from issue of shares
(C) Share issued to vendors
(D) Redemption of debentures
(E) Interest paid

Choose the correct answer from the options given below.

Answer & explanation

Correct answer: option 4

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

Financing activities change the size and composition of owners' capital and borrowings.

(A) Dividend received – not financing: for a non-financial company it is an investing inflow.

(B) Proceeds from issue of shares – financing inflow.

(C) Share issued to vendors – not shown at all: it is a non-cash transaction, excluded from the cash flow statement.

(D) Redemption of debentures – financing outflow (repayment of amounts borrowed).

(E) Interest paid – financing outflow for a non-financial company.

NCERT (2026-27 edition):
Cash from Financing Activities

Extract from the NCERT textbook

NCERT (2026-27 edition):
Treatment of Some Peculiar Items – “… In case of a non-financial enterprise, as per AS-3, it is considered more appropriate that payment of interest and dividends are classified as financing activities whereas receipt of interest and dividends are classified as investing activities.”

NCERT (2026-27 edition):
Non-cash Transactions – “… As per AS-3, investing and financing transactions that do not require the use of cash or cash equivalents should be excluded from a cash flow statement. Examples of such transactions are – acquisition of machinery by issue of equity shares or redemption of debentures by issue of equity shares.”