Match List-I with List-II

List–I	List–II
(A) Cash Inflows & Operating Activities	(I) Proceeds from issue of preference or equity shares
(B) Cash Inflows & Financing Activities	(II) Receipt from royalties, fees, commission and other revenues
(C) Cash Inflows & Investing Activities	(III) Payment of Taxes
(D) Cash Outflows & Operating Activities	(IV) Proceeds from disposal of Machinery

Choose the correct answer from the options given below:

In a Cash Flow Statement, activities are classified into three categories: Operating, Investing, and Financing. Let's match each item correctly:

(A) Cash Inflows & Operating Activities → (II) Receipt from royalties, fees, commission and other revenues

Operating activities relate to the principal revenue-producing activities of the business. Receipts from royalties, fees, commission and other revenues are cash inflows from day-to-day business operations.

(B) Cash Inflows & Financing Activities → (I) Proceeds from issue of preference or equity shares

Financing activities involve changes in the size and composition of owners' capital and borrowings. Issuing shares brings in cash from owners/investors, which is a financing cash inflow.

(C) Cash Inflows & Investing Activities → (IV) Proceeds from disposal of Machinery

Investing activities deal with acquisition and disposal of long-term assets. Sale of machinery (a fixed asset) generates cash inflow under investing activities.

(D) Cash Outflows & Operating Activities → (III) Payment of Taxes

Tax payments are treated as operating cash outflows as they arise from the operating activities of the business and cannot be specifically identified with investing or financing activities.

Correct matching: (A) - (II), (B) - (I), (C) - (IV), (D) - (III)

Option 1 is correct.