Question : Under which type of activity will you classify 'Refund of Income Tax received' while preparing the Cash Flow Statement?
Option 1: Operating activities
Option 2: Investing activities
Option 3: Financing activities
Option 4: Cash and cash equivalents
Correct Answer: Operating activities
Solution : Answer = Operating activities
'Refund of Income Tax received' while preparing the Cash Flow Statement should be shown under the heading of operating activities as an extraordinary item. This is because it relates to the core operations of the business and represents a cash inflow associated with taxes paid in previous periods. Hence, the correct option is 1.
Question : Under which type of activity will you classify Income Tax paid while preparing the Cash Flow Statement?
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