CBSE 2025, Set 2

Question

Statement I: In case of non-financial enterprises, payment of interest and dividends are classified as financing activities, whereas receipt of interest and dividends are classified as investing activities.
Statement II: Investing and financing transactions that require the use of cash or cash equivalents, should be excluded from cash flow statement.

Choose the correct alternative from the following: A). Both the statements are false. B). Both the statements are true. C). Statement I is false and Statement II is true. D). Statement I is true and Statement II is false.

Edvaya · Accepted Answer

The correct answer is Statement I is true and Statement II is false.. (D) Statement I is true and Statement II is false. **Explanation:** Statement I correctly classifies these items for a non-financial enterprise as per AS-3. Statement II is false because non-cash transactions are excluded, but transactions requiring the use of cash/cash equivalents *must* be included in the cash flow statement.

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Accountancy > Financial Statements Analysis > Cash Flow Statement

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