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mediumMCQCUET Accountancy 2023 28 May Shift 12026Accountancy
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A company acquires machinery worth . It pays of the amount immediately by cheque and executes a bond for the remaining balance. Determine the net cash impact and the nature of the activity for the Cash Flow Statement:

  1. A
    Inflow operating activity
  2. B
    Outflow Investing activity
  3. C
    Inflow Investing activity
  4. D
    Outflow Investing activity

Solution & Step-by-step Explanation

* The acquisition of a fixed asset (machinery) is an Investing Activity.The total cost is , but only is paid in cash via cheque:

The remaining balance settled by issuing a bond is a non-cash transaction and is excluded from the cash flow statement. Therefore, it results in an Investing Activity Outflow of .

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A company acquires machinery worth . It pays of the amount immediately by cheque and executes a bond for the remaining balance. Determine the net cash impact and the nature of the activity for the Cash Flow Statement:
A
Inflow operating activity
B
Outflow Investing activity
C
Inflow Investing activity
D
Outflow Investing activity

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