Question

X Ltd. purchased furniture for ₹ 20,00,000, paying 60% by issue of equity shares of ₹ 10 each and the balance by a cheque. This transaction will result in?

Options

• Cash used in investing activities ₹ 20,00,000.

• Cash generated from financing activities ₹ 12,00,000.

• Increase in cash and cash equivalents ₹ 8,00,000.

• Cash used in investing activities ₹ 8,00,000.

Answer 1

Cash used in investing activities ₹ 8,00,000.

Explanation:

Since ₹ 12,00,000 was paid through equity shares (non-cash), only ₹ 8,00,000 was paid by cheque, which is actual cash. Hence, cash outflow under investing activities is ₹ 8,00,000 for purchasing furniture.