Question

On 1st April 2023, Tarzan Ltd. purchased 7,000, 7% Debentures of ₹ 100 each of Tintin Ltd. It received interest of ₹ 7,000 on these debentures on 31st March 2024.

How will this information be presented in the Cash Flow Statement of Tarzan Ltd. for the year 2023-24?

P: ₹ 70,000 as cash outflow in Investing Activity

Q: ₹ 70,000 as cash outflow in Financing Activity

R: ₹ 7,000 as cash inflow in Investing Activity

S: ₹ 7,000 as cash ouflow in Operating activity

Options

• Only P and R

• Only P and S

• Only P and Q

• Only R and S

Answer 1

Only P and R

Explanation:

A debenture purchased by the company is like Tarzan Ltd.’s investment in Tintin Ltd., and the interest received on this investment is also an investment activity.