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Question : If 6% Pref. share capital of Rs. 2,00,000 were redeemed at a premium of 5%, while preparing Cash Flow Statement its effect on cash flow will be :

Option 1: Cash used from financing activities Rs.2,12,000

Option 2: Cash received from financing activities Rs.2,12,000

Option 3: Cash used (Payment) from financial activities Rs.2,10,000

Option 4: Cash used (Payment) from financial activities 2,00,000


Team Careers360 13th Jan, 2024
Answer (1)
Team Careers360 20th Jan, 2024

Correct Answer: Cash used (Payment) from financial activities Rs.2,10,000


Solution : Redemption of Pref. Share = Rs.200000 + 10000 = 210000

Note = Rs.200000 + 5% (Premium on Redemption) = Rs.210000

Cash Used (Payment) From Financial activity Rs.210000

Hence the correct answer is Option 3.

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