[ISC] Q. 2 Cash Flow Statement Solution TS Grewal Class 12 (2026-27)
Solution of Question number 2 of the Cash Flow Statement of TS Grewal Book 2026-27 session ISC Board?
State Which of the following transactions are classified or shown as Investing Activity:
(i) Proceeds from sale of Investments
(ii) Loan taken from Bank
(iii) Purchase of Debentures
(iv) Dividend received on Investments
(v) Public Deposits given
(vi) Issue of Equity Shares.
Solution:-
(i) Proceeds from sale of Investments
Reason:
Proceeds from the Sale of Investments is an Investing Activity because it involves disposing of long-term assets to liquidate capital rather than generating daily operational revenue. Under accounting standards, cash flows arising from the acquisition and disposal of long-term assets and other investments (not included in cash equivalents) are classified as investing activities.
(iii) Purchase of Debentures
Reason:
Purchase of Debentures is an Investing Activity because it represents the acquisition of a long-term financial asset to earn investment income like interest. Under accounting standards, outflowing cash to buy securities or debt instruments of other companies is classified as an investment rather than an operational or financing activity.
(iv) Dividend received on Investments
Reason:
Dividend Received on Investments is an Investing Activity because it is an income generated directly from the company’s non-current assets and long-term placements of capital. Under accounting standards, any cash inflow derived from holding an investment—such as interest or dividends—is classified alongside the disposal or acquisition of those same investment assets.
(v) Public Deposits given
Reason:
Public Deposits Accepted (Inflow): This is a Financing Activity because it represents a source of long-term or short-term borrowing used to raise capital, thereby altering the size and composition of the company’s debt structure.
Public Deposits Repaid (Outflow): This is also a Financing Activity because it is the direct repayment or settlement of that borrowed capital liability.
