Financial Statements

Cash Flow

Easy

While preparing Cash Flow Statement, purchase of goodwill is treated as:

Operating activity

Financing activity

Investing activity

Extraordinary item

✅ Correct Option: 3

When making a Cash Flow Statement, we categorize cash flows into three main activities: operating, investing, and financing.

Goodwill purchase is related to acquiring a business or asset, which falls under investing activities.

So, when you buy goodwill, it shows up in the investing section of the Cash Flow Statement.

Therefore, the correct answer is: Investing activity.

2023: 11 June Shift 3

Tax paid on capital gains by the company is shown in Cash Flow Statement as :

2023: 28 May Shift 1

Match List - I with List - II.

List - I	List - II
(A) The Accounting basis for Cash Flow Statement is	(I) Investment in shares
(B) Dividend paid on Equity and Preference capital comes under	(II) Cash Basis
(C) It can not be considered as cash and cash equivalents	(III) Treasury bills
(D) It can be classified as cash and cash equivalents	(IV) Cash outflow from Financing Activities

Choose the correct answer from the options given below :

2022: 15 July Shift 2

Interest paid on debentures by a manufacturing company would be

2024

Match List-I with List-II

2023: 28 May Shift 1

Cash equivalents refers to :

(A) Demand deposits with Bank

(B) Bills receivables

(D) Commercial Paper

(E) Marketable Securities

Choose the correct answer from the options given below :

2026: 23 May Shift 2

What will the amount of cash inflows from financing activities?

Long term Loans as on as on 1st April, 2024 Rs. 3,00,000

Long term Loans as on as on 31st March, 2025 Rs. 3,50,000

Repayment of loan during the year Rs. 1,50,000

Solution