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NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Financial Analysis

Which of the following is a recognised cash flow statement classification under Ind AS 7 for interest paid by a non-financial company?

A non-financial company may show interest paid either under operating activities or under financing activities in its cash flow statement. The choice must be disclosed and applied consistently each period. It is not shown under investing activities or left out.

  1. AOnly operating activities
  2. BOnly investing activities
  3. CEither operating or financing activities, applied consistentlyCorrect
  4. DAlways shown outside the cash flow statement

Explanation

Under Ind AS 7, a non-financial entity may classify interest paid as operating or financing, provided the policy is applied consistently from period to period. It is not restricted to one head, and it is not excluded from the statement. Investing is not appropriate for interest paid on borrowings.

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