Question

From the above information, ‘Cash flows from investing activities’ will be: \[ \begin{array}{|c|c|} Purchased (\rupee) & Sold (\rupee)
\text{Investments: 2,00,000} & \text{Investments: 1,80,000}
\text{Goodwill: 3,00,000} & \text{Goodwill: --}
\end{array} \]

• A. Inflow \rupee 3,20,000
• B. Outflow \rupee 3,20,000
• C. Outflow \rupee 20,000
• D. Inflow \rupee 20,000

Hint:

Investing activities include cash flows related to the purchase and sale of long-term assets such as investments and goodwill.

Answer 1

The Correct Option is B

Cash outflows for investments include the purchase of investments and goodwill: \[ \text{Outflow} = \rupee 2,00,000 + \rupee 3,00,000 = \rupee 5,00,000 \] Cash inflows from investments include the sale of investments: \[ \text{Inflow} = \rupee 1,80,000 \] Net cash flow from investing activities: \[ \text{Net Outflow} = \rupee 5,00,000 - \rupee 1,80,000 = \rupee 3,20,000 \]