Question

Which of the following transactions will not result in a flow of cash?

Options

• Purchase of furniture through a cheque.

• Payment of salaries.

• Issue of shares.

• Cash deposited in the bank.

Answer 1

Cash deposited in the bank.

Explanation:

In a Cash Flow Statement, “Cash” includes both cash in hand and bank balances. Depositing cash into the bank is just moving money within the same category. Since the total balance of cash and cash equivalents doesn’t change, there is no net flow of cash. All other options involve money coming in or going out of the business, which creates a flow.