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Home Questions XZMR357Y2S
Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

Read the following information and answer the question.

PARTICULARS AMOUNT AT THE BEGINNING
OF THE YEAR (₹)		 AMOUNT AT THE END
OF THE YEAR (₹)
Plant (cost) 3,00,000 3,20,000
Accumulated depreciation 90,000 1,00,000
Patents 2,60,000 1,40,000
Goodwill 80,000 1,00,000

ADDITIONAL INFORMATION:

  1. The depreciation charged during the year on the plant was ₹36,000.
  2. A plant having a book value of ₹20,000 was sold for ₹16,000 during the year.
  3. Patents having a book value of ₹80,000 were sold for ₹1,10,000 during the year.

How much cash flow is from investing activity?

Options:

₹60,000

₹50,000

₹75,000

₹40,000

Correct Answer:

₹40,000

Explanation:

The correct answer is option 4- ₹40,000.

Sale of plant = 16,000 (inflow)
Purchase of plant = 66,000 (outflow)
Sale of patent = 1,10,000 (inflow)
Purchase of goodwill = 20,000 (outflow)

Net cash flow = Inflow - Outflow
                      = (16,000 + 1,10,000) - (66,000 + 20,000)
                      = 1,26,000 - 86,000
                      = 40,000

So, there is cash inflow of 40,000 from investing activity.

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