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CMA Intermediate · Corporate Accounting and Auditing · Cash Flow Statement

Under Ind AS 7, financing activities are those activities that result in changes in the size and composition of which of the following?

Financing activities under Ind AS 7 are activities that change the size and composition of an entity's contributed equity and its borrowings. Share issues, buy-backs, raising and repaying loans fall here, whereas fixed assets and investments are investing, and trading items are operating.

  1. AContributed equity and borrowings of the entityCorrect
  2. BInventories and trade receivables of the entity
  3. CProperty, plant and equipment and investments of the entity
  4. DRevenue and operating expenses of the entity

Explanation

Ind AS 7 defines financing activities as activities that result in changes in the size and composition of the contributed equity and borrowings of the entity. Changes in PPE and investments belong to investing activities, while inventories, receivables and revenue relate to operating activities.

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