Question

Financial Statement Analysis
0.23 Which of the following transactions would result inflow of cash:
(3) Cath withdrawn from Bank for office use.
(b) Purchase of machinery worth Rs 2,00,000 and issued shares in consideration thereof.
(c) Sale of furniture for Rs 3,000 to Mr. Mohan.
(d) Casb received from Debtors Rs 6,000
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Answer 1

Explanation:

Amount received from debtors Rs74,000 will be received in cash. This is the only transaction that results in flow (inflow) of cash into the business.

Why other options are incorrect?

1. Deposit of cash into bank and withdrawal of cash from bank are merely the cash management activities of the business. They do not involve any cash flow.

2. Conversion of debentures into equity shares is a mere change in capital structure of the company. It does not result in cash flow.

Hence, the correct answer is option (iii).