Question

‘Paid ₹ 5,00,000 to acquire shares in Neligare Industries and received a dividend of ₹ 30,000 after acquisition.’ The transaction will result in ______.

Options

• Cash outflow from Financing Activities ₹ 4,70,000.

• Cash inflow from Investing Activities ₹ 4,70,000.

• Cash inflow from Financing Activities ₹ 4,70,000.

• Cash outflow from Investing Activities ₹ 4,70,000.

Answer 1

‘Paid ₹ 5,00,000 to acquire shares in Neligare Industries and received a dividend of ₹ 30,000 after acquisition.’ The transaction will result in Cash outflow from Investing Activities ₹ 4,70,000.

Explanation:

Buying shares in another company is an investment, which makes both transactions part of Investing Activities. Purchasing the shares causes a cash outflow of ₹ 5,00,000, while receiving the dividend creates a cash inflow of ₹ 30,000. When you net them out (₹ 5,00,000 outflow minus ₹ 30,000 inflow), it results in a net cash outflow of ₹ 4,70,000 under investing activities.