Q. 1 DK Goel Cash Flow Statement Solutions Class 12 CBSE (2024-25)

Solution of question number 1 of Cash Flow Statement chapter 7 of DK Goel Class 12 CBSE (2024-25).

Identify the following transactions as belonging to (I) Operating, (ii) Investing, (iii) Financial Activities and (iv) Cash Equivalents:

1. Interest paid
2. Interest paid on long-terms loans by
   (a) Finance Company
   (b) Non-Finance Company
3. Interest received
4. Interest received on Investments by a bank
5. Interest received on investments by a manufacturing company.
6. Dividend received
7. Dividend received by a Mutual Fund Company
8. Purchase of Investments
9. Purchase of Investments by a finance company
10. Purchase of Investments by a non-finance company
11. Bank Balance
12. Short-term deposits in banks
13. Bank Overdraft
14. 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.

List of all Solutions

S.N	Solutions
1	Question – 1
2	Question – 2
3	Question – 3
4	Question – 4
5	Question – 5
6	Question – 6
7	Question – 7
8	Question – 8
9	Question – 9
10	Question – 10

S.N	Solutions
11	Question – 11
12	Question – 12
13	Question – 13
14	Question – 14
15	Question – 15
16	Question – 16
17	Question – 17
18	Question – 18
19	Question – 19
20	Question – 20

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24	Question – 24
25	Question – 25
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48	Question – 48
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51	Question – 51
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55	Question – 55
56	Question – 56
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58	Question – 58
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60	Question – 60

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61	Question – 61
62	Question – 62
63	Question – 63
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65	Question – 65
66	Question – 66
67	Question – 67
68	Question – 68
69	Question – 69
70	Question – 70

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71	Question – 71
72	Question – 72
73	Question – 73
74	Question – 74
75	Question – 75
76	Question – 76
77	Question – 77