XYZ Ltd. has given you the following information:
| Machinery as on April 01, 2025 | Rs. 50,000 |
| Machinery as on March 31, 2026 | Rs. 60,000 |
| Accumulated Depreciation as on April 01, 2025 | Rs. 25,000 |
| Accumulated Depreciation as on March 31, 2026 | Rs. 15,000 |
During the year, a machine costing Rs. 25,000 with accumulated depreciation of Rs. 15,000 was sold for Rs. 13,000.
Calculate cash flow from Investing Activities on the basis of above information.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Net cash used in Investing Activities Rs. (22,000)
Investing activities cover the purchase and sale of fixed assets. Depreciation is not a cash item, so the accumulated depreciation figures only help to find the cost of the machine sold; they are not cash flows.
Cost of machinery sold = Rs. 25,000
Closing machinery Rs. 60,000 = Opening Rs. 50,000 + Purchases − Rs. 25,000
Purchases = Rs. 35,000 (outflow)
Sale proceeds = Rs. 13,000 (inflow)
Net cash flow = Rs. 13,000 − Rs. 35,000 = Rs. (22,000), a net use of cash
Rs. 13,000 alone leaves out the purchase, and Rs. (35,000) alone leaves out the sale.
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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