Question : Calculate the resulting cash flow and state the nature of cash flow from the following information:
Acquired machinery for 3,50,000 by issuing cheque.
Option 1: Investing activity and outflow 3,50,000
Option 2: Investing activity and inflow 3,50,000
Option 3: Investing activity and no flow
Option 4: Operating activity and outflow 3,50,000
Correct Answer: Investing activity and outflow 3,50,000
Solution : Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Machinery purchased is an Investing Activity and there is an outflow of cash.
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