Question : Adjustment of increase in the balance of 'Securities Premium' while preparing a Cash Flow Statement is
Option 1: shown as Cash from Financing activities
Option 2: shown as Cash from operating activities
Option 3: shown as Cash from investing activities
Option 4: None of the above
Correct Answer: shown as Cash from Financing activities
Solution : Answer = shown as Cash from Financing activities
The adjustment of an increase in the balance of 'Securities Premium' is shown as 'Cash from Financing Activities' in the Cash Flow Statement. This is because securities premium represents funds received from shareholders, which is a financing activity. If the value of securities premium is increased it means share issued at a premium. It should be shown as cash flow from financing activities. Hence, the correct option is 1.
Question : Adjustment of increase in the balance of 'Bank Overdraft' while preparing a Cash Flow Statement is __________________.
Option 1: inflow of operating activities
Option 2: inflow of investing activities
Option 3: inflow of financing activities
Option 4: extra-ordinary items
Question : Where will you show purchase of intangible assets in a Cash Flow Statement?
Option 1: Shown as outflow under 'Cash flows from investing activities'.
Option 2: Shown as outflow under 'Cash flows from operating activities'.
Option 3: Shown as inflow under 'Cash flows from investing activities'.
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