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Question
Sultan Chand & Sons (P) Ltd. is a educational publisher. The company purchased a machinery of ₹ 4,00,000 for the use in packing of books. Purchase of machinery will affect ______.
Options
Cash Flow from Operating Activities
Cash Flow from Investing Activities
Cash Flow from Financing Activities
None of these.
MCQ
Fill in the Blanks
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Solution
Sultan Chand & Sons (P) Ltd. is a educational publisher. The company purchased a machinery of ₹ 4,00,000 for the use in packing of books. Purchase of machinery will affect Cash Flow from Investing Activities.
Explanation:
For a non-financial company like a publisher, purchasing a long-term fixed asset (machinery) means investing in productive assets that will yield economic benefits over multiple years. Under accounting standards like AS 3/Ind AS 7, any cash spent on acquiring or disposing of long-term assets, such as property, plant, and equipment, is strictly classified as a cash outflow under Investing Activities.
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