Which of the following activities come under the head of "financing activities"?
A. Purchase of shares
B. Dividend payable on equity shares
C. Issue of 9% Debentures
D. Redemption of preference shares
E. Interest paid on Debentures
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → C, D and E only
Financing activities change the size and composition of the owners’ capital and borrowings, and include the return paid on them.
A. Purchase of shares — Incorrect. Buying shares of another company is an investment, an investing activity.
B. Dividend payable on equity shares — Incorrect. A dividend still payable has not been paid, so there is no cash flow; only dividend paid is a financing outflow.
C. Issue of 9% Debentures — Correct. Cash raised by borrowing is a financing inflow.
D. Redemption of preference shares — Correct. It changes the owners’ capital, so it is a financing outflow.
E. Interest paid on Debentures — Correct. For a non-financial enterprise interest paid is a financing outflow.
NCERT (2026-27 edition): NCERT (2026-27 edition):
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