Cash Flow Statement Test - 3

Refund of income tax is the part of operating activities in Cash Flow Statement. Income tax paid (net of tax refund) is shown as an Operating activity separately.

Purchase of fixed assets will be classified as investing activity for both finance and non – finance company. As fixed Assets are Non Current Investment.

Computer software is an intangible asset for a company which is shown under Non-Current Assets sub, head fixed intangible assets.

Sale of copyrights is concerned with Investing activities. It is added in Investing activities as proceeds from the sale of copyrights (Assets).

Increase in the value of copyrights means company has purchased copyrights (Non Current Assets). So Less Rs. 32,000 in investing activities.

Redemption of preference shares is concerned with financing activities. It will be deducted in financing activities as cash used in redemption of prefrence share.

Buy back of shares is concerned with financing activities. This is the situation where one company is buying its own shares form the open market as change in financial position.

Income tax is concerned with only operating activities. Tax paid is deducted at the end while calculating Cash flow from operating activities in Cash Flow statement.

The various activities in Cash Flow Statement as operating, investing and financing classified as per Accounting Standard – 3 (AS- 3 Revised).

Internal movement in cash and cash equivalents will not make any effect. Cash credit is not part of cash and cash equivalents. It is part of financing activities.