Which of the following transactions will result into 'Flow of Cash’?
(a) Deposited Rs 10,000 into bank.
(b) Withdrew cash from bank Rs 14,500.
(c) Sale of machinery of the book value of Rs 74,000 at a loss of Rs 9,000.
(d) Converted Rs 2,00,000 9% debentures into equity shares.
Flow of cash means the total amount of money being transferred into and out of a business, especially as affecting liquidity. In this question only option c amounts to cash flow. If a machinery of book value 74,000 Rs is sold at a loss of Rs 9,000, the cash inflow will be Rs 65,000. All other options do not constitute a flow of cash in any form but shows mere change in form of assets and liabilities.
What is meant by 'Cash Equivalents' while preparing Cash Flow Statement?
State the objective of preparing 'Cash Flow Statement'.
Following is the Balance Sheets of Thermal Power Ltd. as at 31-3-2014:
While preparing the 'Cash Flow Statement' the accountant of Gulfam Ltd., a financing company showed 'Dividend received on Investments' as 'Investing Activity'. Was he correct in doing so? Give reason.
