Advanced AccountingQuestion 5279 of 305
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13. What would be the value of Cash Flow from Financing Activities?

Options

A` (50,000)
B` (1,35,600)
C` 54,300
D` (1,60,600)
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Correct Answer

✅ Option D — ` (1,60,600)

All Options:

  • A` (50,000)
  • B` (1,35,600)
  • C` 54,300
  • D` (1,60,600) ✓

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Detailed Solution & Explanation

To compute Net Cash Flow from Financing Activities from the summary cash account under AS 3:
1. Financing Inflows:
- Bank Loan: ‘ 5,00,000\displaystyle `\,5,00,000
- Issue of Shares: ‘ 2,50,000\displaystyle `\,2,50,000
- Total Financing Inflows = ‘ 7,50,000\displaystyle `\,7,50,000
2. Financing Outflows:
- Underwriting Commission: ‘ 25,000\displaystyle `\,25,000
- Redemption of Preference Shares: ‘ 8,00,000\displaystyle `\,8,00,000
- Interest on long-term borrowings: ‘ 85,600\displaystyle `\,85,600
- Total Financing Outflows = ‘ 9,10,600\displaystyle `\,9,10,600
3. Net Cash from Financing Activities is:
Net Financing Cash Flow=‘ 7,50,000−‘ 9,10,600=‘ (1,60,600)(Outflow)\text{Net Financing Cash Flow} = `\,7,50,000 - `\,9,10,600 = `\,(1,60,600) \quad (\text{Outflow})
Hence, **Option D** is the correct answer.

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