Question

Identify the cash transaction from the following :

• A. Purchase of machinery by issue of preference shares
• B. Redemption of Debentures by issuing equity shares
• C. Issue of Debentures as collateral security
• D. Purchase of land by taking loan

Hint:

A Cash transaction should strictly involve any debit or credit from bank account.

Answer 1

The Correct Option is D

Understanding Cash Transactions:
A cash transaction involves the actual movement of cash (or cash equivalents) into or out of a business.
Explanation:
Purchase of land by taking loan: Here cash moves into your organization.
All the other transactions include exchange of shares, debentures in place of payment, so no cash is transacted.