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Question
The transaction ‘Acquisition of machinery by issue of Equity Shares of ₹ 5,00,00,000’ will result in ______.
Options
Cash inflow of ₹ 5,00,00,000 from Financing Activities.
Cash outflow of ₹ 5,00,00,000 from Financing Activities.
Cash outflow of ₹ 5,00,00,000 from Investing Activities.
No flow of cash.
MCQ
Fill in the Blanks
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Solution
No flow of cash.
Explanation:
Purchasing machinery by issuing equity shares is a non-cash transaction. Since the machinery was acquired directly in exchange for shares, no actual cash or bank balance entered or left the company. Because the Cash Flow Statement only records transactions that involve the actual flow of cash, this event has no effect and will not be shown in the statement, though it is disclosed separately in the notes.
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