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The cash received from selling a subsidiary’s shareholding for cash is classified under which category in the cash flow statement?

medium MCQ 1 mark Class 12 · Accountancy · Cash Flow Statement
  1. Operating activities
  2. Investing activities
  3. Financing activities
  4. Not disclosed in cash flow statement
Answer
Investing activities

The correct answer is Investing activities — Select the appropriate category: Investing activities.

Step-by-step solution

  1. Identify the nature of the transaction: cash received from the sale of an investment (shareholding).
  2. Cash inflows from the sale of investments are grouped under cash flow from investing activities as per standard classification.
  3. Select the appropriate category: Investing activities.
Common mistake: Classifying the proceeds as financing activities

Concept tested: Classification of cash flows

Published · How this solution was prepared and checked

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