Financial Statements

Cash Flow

Medium

Capital gain tax paid on sale of fixed assets should be classified as _______

Cash inflow from Operating Activities

Cash outflow from Operating Activities

Cash inflow from Investing Activities

Cash outflow from Investing Activities

✅ Correct Option: 4

Capital gain tax is directly related to the sale of a fixed asset, which is an investing activity. Therefore, the tax paid on such capital gain is classified along with the related activity as a Cash outflow from Investing Activities.

2023: 29 May Shift 2

W Ltd has given you following information

Item	Amount
Machinery (opening Balance)	Rs. 50,000
Machinery (closing Balance)	Rs. 60,000
Accumulated Depreciation (opening balance)	Rs. 25,000
Accumulated Depreciation (closing balance)	Rs. 15,000

During the year, a machine costing Rs. 25,000 with accumulated depreciation of Rs. 15,000 was sold for Rs. 13,000. Calculate Cash Flow from Investing Activity

2026: 24 May Shift 1

If the net profits made during the year are Rs. 1,00,000 and the bills receivables have decreased by Rs. 10,000 and purchase of machinery is Rs.2,00,000 during the year then the cash flow from operating activities will be equal to:

2022: 30 Aug Shift 2

Match List I with List II

	LIST I		LIST II
A.	Cash Equivalents	I.	Interim Dividend paid
B.	Financing Activities	II.	Selling & Distribution expenses paid
C.	Operating Activities	III.	Marketable securities
D.	Investing Activities	IV.	Dividend received on Shares held as investment

Choose the correct answer from the options given below:

2022: 20 Aug Shift 2

Operating Profit before working capital changes will be Rs. ________

2022: 20 July Shift 1

On 1st April 2020, the balance of furniture of ABC Ltd. was Rs. 20,000. During the year furniture costing Rs. 4,000 was sold at a gain of Rs. 3,000. Depreciation was charged on it Rs. 5,000. The balance of furniture on 31.3.21 was Rs. 28,000. The amount of furniture purchased was :

2025: 3 June Shift 1

Which transaction among the following is NOT disclosed in the cash flow statement due to the non-cash nature of the transaction.

Capital gain tax paid on sale of fixed assets should be classified as _______

Solution

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