Question : M/s Deva and Sons a bamboo pen producing company, Purchased Machinary for Rs.9,00,000. It received dividend of Rs.70,000 on investment of shares. The company also sold an old machine with the book value of Rs.79,000 at a loss of Rs.10,000. Compute the amount of cash flow used from/in Investing activity?
Option 1: Rs.5,61,000
Option 2: Rs.4,61,000
Option 3: Rs.7,61,000
Option 4: None of the Above
Correct Answer: Rs.7,61,000
Solution : The cash Generated (or spent) on non current asset that are expected to generate profit in future is refereed to as the cash flow from investing activity.
| Particulars | Amount |
| Inflows | |
| Dividend Received | 70000 |
| Sale of old Machinary | 69000 |
| Outflows | |
| Purchase of Machinary | (900000) |
| Hence Net Cash outflow from investing activity | (761000) |
Hence the correct answer is option 3.




