Question

Match List – I with List – II.

• A. (A)-(III), (B)-(IV), (C)-(I), (D)-(II)
• B. (A)-(III), (B)-(II), (C)-(I), (D)-(IV)
• C. (A)-(IV), (B)-(III), (C)-(I), (D)-(II)
• D. (A)-(I), (B)-(II), (C)-(III), (D)-(IV)

Hint:

Investment sale = Investing activity. Depreciation = Non-cash, added back to operating cash flow. Loan repayment = Financing activity. Increase in current assets = Deduction from operating cash flow.

Answer 1

The Correct Option is B

In the cash flow statement, activities are categorized as follows:
- (A) - (III): Sale of Investment is an investing activity since it involves managing long-term assets.
- (B) - (II): Depreciation is a non-cash expense and is added back under operating activities to adjust profit to cash flow.
- (C) - (I): Repayment of Long-Term Borrowings is a financing activity related to capital structure management.
- (D) - (IV): An increase in Current Assets reduces cash flow from operating activities, so it is deducted.