Question

Which of the transactions will not result in flow of Cash?

1. Issue of Equity Shares of ₹ 20,00,000.
2. Purchase of machinery of ₹ 5,00,000.
3. Redemption of Debentures of ₹ 10,00,000.
4. Cash deposited into bank ₹ 50,000.

Options

• 1 & lI

• II & III

• 1 & III

• only IV

Answer 1

only IV

Explanation:

Depositing cash into the bank involves moving money from cash-in-hand to a bank account, both of which are components of Cash and Cash Equivalents. Since this transaction is merely a movement within the cash balance itself rather than an external inflow or outflow, it does not result in a flow of cash. In contrast, issuing equity shares brings in external cash (inflow), while purchasing machinery and redeeming debentures result in external cash payments (outflows).