[DK Goel] Q. 1 Cash Flow Statement Solutions Class 12 CBSE (2026-27)
Solution of question number 1 of Cash Flow Statement chapter 7 of DK Goel Class 12 CBSE (2026-27).
Identify the following transactions as belonging to (I) Operating, (ii) Investing, (iii) Financial Activities and (iv) Cash Equivalents:
- Interest paid
- Interest paid on long-terms loans by
(a) Finance Company
(b) Non-Finance Company - Interest received
- Interest received on Investments by a bank
- Interest received on investments by a manufacturing company.
- Dividend received
- Dividend received by a Mutual Fund Company
- Purchase of Investments
- Purchase of Investments by a finance company
- Purchase of Investments by a non-finance company
- Bank Balance
- Short-term deposits in banks
- Bank Overdraft
- Marketable Securities
Solution:-
(I) Operating Activities : 2 (a), 4, 7,9
Reason:-
Interest paid on long-term loans by a finance company is an operating activity as it is the principal (Revenue-Producing) activity of the firm.
Interest received on Investments by a bank is an operating activity as it is the principal (Revenue-Producing) activity of a Bank.
Dividend received by a Mutual Fund Company is an operating activity as it is the principal (Revenue-Producing) activity of a Finance (mutual Fund) Company.
The purchase of Investments by a finance company is an operating activity as it is the principal (Revenue-producing) activity of a Finance Company.
(ii) Investing Activities : 3, 5, 6, 8, 10
Interest received is an investing activity of a non-financing company as it is not the principal activity of it.
Interest received on investments by a manufacturing company is an investing activity as it is not the principal activity of it.
Dividend received by a non-financing company is an investing activity as it is not the principal activity of it. it is the source of other income.
Purchase of Investments by non-finance company is an act of acquiring assets of the firm. Thus it is the investing activating. It is not the principle (revenue producing) activity.
Purchase of Investments by a non-finance company is an act of acquiring assets of the firm. Thus it is the investing activating. It is not the principle (revenue-producing) activity.
(iii) Financing Activities : 1, 2 (b), 13
Interest paid is an act of raising funds to the non-financing activity. Thus it is the Financing Activity. It is not the principal (Revenue-Producing) activity of a firm.
Interest paid on long-terms loans by Non-Finance Company is an act of raising funds to the non-financing activity. Thus it is the Financing Activity. It is not the principal (Revenue-Producing) activity of a firm.
Bank Overdraft
Bank Overdraft is an act of raising funds to the firm by a non-finance company. It is not the principal (Revenue Producing) activity of a firm.
(iv) Cash Equivalents : 11, 12, 14
Hint : Bank and Mutual Fund Company are finance companies.
