Question

Classify the following activity into operating activities, investing activities, financing activities or cash activities ·

"Proceeds from long-term borrowings."

विकल्प

• Operating activities

• Investing activities 

• Financing activities

• Cash activities

Answer 1

Financing activities

Explanation:

Financing activities, according to AS-3, are those that result in changes in the amount and composition of the owners' capital (including preference share capital in the case of a corporation) and the enterprise's borrowings. Separate disclosure of cash flows deriving from financing activities is crucial since it helps estimate claims on future cash flows by sources of funds to the firm (both capital and borrowings).