Question

Which of the following transactions will result in the flow of cash?
(1) Cash was withdrawn from bank Rs 20,000.
(2) Issued Rs 20,000; 9% debentures for the vendors of machinery.
(3) Received Rs 19,000 from debtors.
(4) Deposited cheques of Rs 10,000 into the bank

Answer 1

Received Rs 19,000 from debtors.

The transaction that resulted in a flow of cash is the amount received in cash from debtors of Rs  19,000.

Deposit of cheque into bank and withdrawal of cash from a bank are cash management activities and do not involve any cash flow. An issue of debentures is regarded as the issue of debentures for consideration other than cash and does not involve any cash flow.