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A company sold an old office chair for Rs. 7,500 cash during the year. Under the cash flow statement, this cash inflow should be classified under which activity?

medium MCQ 3 marks Class 12 · Accountancy · Cash Flow Statement
  1. Operating activities
  2. Investing activities
  3. Financing activities
  4. None of the above
Answer
Investing activities

The correct answer is Investing activities — Therefore the correct classification is Investing activities.

Step-by-step solution

  1. Identify the nature of the asset being sold – a fixed asset (office chair).
  2. Cash received from disposal of a fixed asset is classified as an investing activity.
  3. Therefore the correct classification is Investing activities.
Common mistake: Choosing operating activity for disposal of a non‑current asset

Concept tested: Classification of cash flows

Published · How this solution was prepared and checked

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