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.
In normal case dividend received on investment will be treated as an investment activity. But as this company is a financing company, which is primarily engaged in lending or borrowings of fund, the dividend received on investment is to be written under operating activity. Hence accountant is wrong.
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.
Following is the Balance Sheets of Thermal Power Ltd. as at 31-3-2014:
What is meant by 'Cash Equivalents' while preparing Cash Flow Statement?
State the objective of preparing 'Cash Flow Statement'.
