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Hero Ltd, started a new venture of making casual shirts. The directors decided to issue 5,000,00 shares of Rs. 10 each at Rs. 12 each. The following assets were purchased by the company

A building of Rs. 10 lakhs

Furniture of Rs. 7 lakhs

Machinery of Rs. 2 lakhs

The company purchased cloth of Rs. 20 lakhs and paid wages Rs. 5,00,000 to the workers. The Directors also decided to buy 10,000 shares of TATA Ltd. of Rs. 10 each and at the end of the year Tata Ltd. Paid Rs. 10,000 as dividend

Dividend received by Hero Ltd. would be _______ activity

Solution

✅ Correct Option: 2

Hero Ltd. is a manufacturing company (non-financial enterprise). Dividend received on investments made in shares of another company represents a return on investment and is therefore classified as a cash inflow from investing activities.

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