Accountancy Part BCash Flow Statement

Match the following with regard to Cash Flow StatementList IList IIA.…

Match the following with regard to Cash Flow Statement

List I	List II
A. Operating activity	I. Raising of loan
B. Investing activity	II. Current investment
C. Financing activity	III. Selling of investment
D. Cash and Cash equivalent	IV. Buying of raw material

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → A-IV, B-III, C-I, D-II

(A) Operating activity — this matches (IV) Buying of raw material. Buying raw material is part of the main revenue-producing activity of the business.

(B) Investing activity — this matches (III) Selling of investment. Sale of long-term investments brings cash in from investing activities.

(C) Financing activity — this matches (I) Raising of loan. Raising a loan changes the borrowings of the business.

(D) Cash and Cash equivalent — this matches (II) Current investment. Short-term, highly liquid investments that can readily be turned into known amounts of cash are cash equivalents.

NCERT (2026-27 edition):
Classification of Activities for the Preparation of Cash Flow Statement

Extract from the NCERT textbook

NCERT (2026-27 edition):
Cash and Cash Equivalents – “As stated earlier, cash flow statement shows inflows and outflows of cash and cash equivalents from various activities of an enterprise during a particular period. As per AS-3, ‘Cash’ comprises cash in hand and demand deposits with banks, and ‘Cash equivalents’ means short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.”