Question

25. Which of the following transactions would result in neither cash inflow or outflow of cash and cash equivalents? A. Issue of share capital B. Issue of bonus shares C. Redemption of debentures D. Trade receivables realized. 1​

Answer 1

Answer:

A. inflow of cash

B. no flow of cash

C. outflow of cash

D. inflow of cash

Answer 2

ISSUE OF BONUS SHARES

The transaction which would result in neither cash inflow or outflow of cash  and cash equivalents is by (B)  issuing bonus shares.

GETTING TO KNOW MORE ABOUT ISSUE OF BONUS SHARES:

* A bonus issue, also known as a scrip issue or a capitalization issue, is when a company offers current shareholders free extra shares. As an alternative to boosting the dividend distribution, a firm may opt to distribute additional shares. For every five shares owned, a firm may provide one bonus share.

* When corporations are short on cash and shareholders demand a regular income, bonus issues are issued to shareholders. The bonus shares can be sold by shareholders to suit their liquidity needs.

* Bonus shares may also be issued to help the corporation reorganize its reserves. There is no cash flow involved in issuing bonus shares. The company's share capital is increased, but not its net assets.