Question

Issue of shares for consideration other than cash will result in ______.

Options

• Inflow of cash

• Outflow of cash

• No flow of cash

• None of these.

Answer 1

Issue of shares for consideration other than cash will result in no flow of cash.

Explanation:

When a company issues shares for consideration other than cash (such as acquiring business assets, machinery, land, or paying promoters for their services), assets or services come into the company, and shares are issued in return.

Since there is no exchange of liquid money or cash equivalents, it results in a non-cash transaction that does not alter cash balances.