From the following information of X Ltd, calculate Cash Flow from Financing Activities.
| April 1, 2021 | March 31, 2022 | |
|---|---|---|
| Long-term Loan | 2,00,000 | 2,60,000 |
During the year, the company repaid a loan of Rs. 1,00,000. Long-term loan carried interest rate of 10%. The loan was repaid on 1st April 2021 and a fresh loan was taken on 31st March 2022.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 50,000 inflow
Financing activities cover loans raised and repaid and the interest paid on them. First find the fresh loan from the loan account.
Opening loan = Rs. 2,00,000
Less: repaid on 1 April 2021 = Rs. 1,00,000
Balance after repayment = Rs. 1,00,000
Closing loan = Rs. 2,60,000
Fresh loan taken on 31 March 2022 = Rs. 2,60,000 − Rs. 1,00,000 = Rs. 1,60,000
Interest is paid only on the loan that was outstanding during the year. The old Rs. 1,00,000 was repaid on the first day and the new loan came on the last day, so interest is on the remaining Rs. 1,00,000 for the full year.
Interest paid = Rs. 1,00,000 × 10% = Rs. 10,000
Cash flow from financing activities:
Fresh loan raised (inflow) = Rs. 1,60,000
Loan repaid (outflow) = (Rs. 1,00,000)
Interest paid (outflow) = (Rs. 10,000)
Net cash from financing activities = Rs. 50,000 inflow
Leaving out the interest gives Rs. 60,000, but interest on long-term loans is itself a financing outflow.
NCERT (2026-27 edition):
|
