CBSE 2025, Set 2

Question

Statement-I: Sale of marketable securities at par will not result in any cash flow.
Statement-II: Marketable securities are cash equivalents.

Choose the correct option from the following: A). Both the Statements are true and Statement-II is the correct explanation of Statement-I. B). Both the Statements are true, but Statement-II is not the correct explanation of Statement-I. C). Statement-I is true and Statement-II is false. D). Statement-I is false and Statement-II is true.

Edvaya · Accepted Answer

The correct answer is Both the Statements are true and Statement-II is the correct explanation of Statement-I.. (A) Both the Statements are true and Statement-II is the correct explanation of Statement-I. **Explanation:** Since marketable securities are classified under Cash and Cash Equivalents, selling them at par is merely a movement within Cash Equivalents, thus not constituting a cash flow (inflow or outflow) in the Cash Flow Statement.

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Accountancy > Financial Statements Analysis > Cash Flow Statement

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