Preference share capital of ₹5,00,000 was redeemed at a premium of 10%, partly out of proceeds of issue of 20,000 equity shares of ₹10 each issued at 10% premium and partly out of profits otherwise available for dividend

CS Executive · Cost and Management Accounting · PYQS · December 2016
Preference share capital of ₹5,00,000 was redeemed at a premium of 10%, partly out of proceeds of issue of 20,000 equity shares of ₹10 each issued at 10% premium and partly out of profits otherwise available for dividends. Choose the correct effect on different activities of cash flow statement from the options given below :
(A) In financing activities, cash outflow ₹5,50,000 and cash inflow ₹2,20,000.
(B) In financing activities, cash outflow ₹5,50,000 and in investing activities, cash inflow ₹2,20,000
(C) Net ₹3,30,000 will be outflow in operating activities
(D) In investing activities cash outflow of ₹5,50,000 and in financing activities cash inflow of ₹2,20,000.

Answer & Explanation:

Correct Answer: Option (A)

Official answer key: (A).

Topics: Financial Management

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