Cash Inflows from Financing Activities does not include-
Cash Inflows from Financing Activities does not include-
Solution
Cash Inflows from Financing Activities include transactions related to raising funds from owners (equity) and lenders (debt). Let's examine each option:
Option 1: Debentures issued at Discount
When debentures are issued (even at discount), the company receives cash from debenture holders. This represents borrowing and is clearly a financing activity.
Cash received = Face Value - Discount amount
Option 2: Mortgage loan raised
A mortgage loan involves receiving cash from a lending institution. This is a typical financing activity as it represents borrowed funds.
Option 3: Dividends and interest received
When the company receives dividends or interest, it means the company has invested in other entities and is earning returns. As per AS-3, dividends and interest received are classified under Investing Activities (or alternatively Operating Activities), not Financing Activities.
This is the item that does NOT belong to Financing Activities.
Option 4: Equity shares issued at Premium
When shares are issued at premium, cash received = Face Value + Premium. This represents capital raised from equity shareholders and is a financing activity.
The key distinction: Financing Activities involve receiving money from or paying money to the providers of capital (shareholders and lenders). Dividends and interest received represent returns on investments made by the company, hence they belong to Investing Activities.