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CMA Intermediate · Financial Management and Business Data Analytics · Cash Flow Statement - Preparation and Analysis

Under AS 3 / Ind AS 7, which of the following is classified as a cash flow from financing activities?

Repayment of long-term borrowings is a financing cash flow because it changes the entity's borrowings. Sale of plant and interest on investments are investing items, while cash received from customers is an operating cash flow.

  1. AProceeds from sale of plant and machinery
  2. BInterest received on investments
  3. CRepayment of long-term borrowingsCorrect
  4. DCash received from customers for goods sold

Explanation

Activities that change the size and composition of owners' capital and borrowings are financing activities. Repayment of long-term borrowings falls here. Sale of plant is investing, interest received on investments is generally investing for non-financial entities, and receipts from customers are operating.

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