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hardMCQCUET Accountancy 2023 11 June Shift 32026Accountancy
1 mark

Tax paid on capital gains by the company is shown in Cash Flow Statement as:

  1. A
    Cash flow from Operating Activities
  2. B
    Cash outflow from Investing Activities
  3. C
    Cash from Financing Activities
  4. D
    Not Considered in cash flow statement

Solution & Step-by-step Explanation

Under Accounting Standard 3 (AS-3), taxes on income are generally classified as cash flows from operating activities. However, if the tax expense can be explicitly and directly identified with an investment activity transaction (like capital gains tax on the sale of fixed assets), it is classified as a Cash outflow from Investing Activities.

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Tax paid on capital gains by the company is shown in Cash Flow Statement as:
A
Cash flow from Operating Activities
B
Cash outflow from Investing Activities
C
Cash from Financing Activities
D
Not Considered in cash flow statement

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