Question

Statement I: ‘Issue of fully paid bonus shares out of Securities Premium Account’ will result in inflow of cash.
Statement II: ‘Cash withdrawn from bank’ will result in inflow of cash.

Hint:

Analyze cash flow questions carefully: Transactions involving internal adjustments (e.g., bonus shares, cash withdrawn) do not lead to cash inflows or outflows.

Answer 1

- Statement I: Issue of fully paid bonus shares does not result in cash inflow, as it involves a transfer within equity accounts, not cash transactions. - Statement II: Cash withdrawn from the bank does not lead to cash inflow, as it only involves a movement of funds within cash and bank accounts.