Question

Paid ₹ 5,00,000 to purchase shares of Suraksha Ltd. and received dividend of ₹ 50,000 after purchase. These transactions will result in ______.

Options

• Cash Used in Investing Activities ₹ 5,00,000.

• Cash generated from Financing Activities ₹ 5,50,000.

• Cash Used in Investing Activities ₹ 4,50,000.

• Cash generated from Financing Activities ₹ 4,50,000.

Answer 1

Cash Used in Investing Activities ₹ 4,50,000.

Explanation:

Both transactions fall under Investing Activities because they relate to buying and earning returns from non-current financial assets (investments). Purchasing the shares creates a cash outflow of ₹ 5,00,000, while receiving the dividend creates a cash inflow of ₹ 50,000. Netting these two together results in a net cash usage (outflow) of ₹ 4,50,000 under Investing Activities.