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

easy MCQ 1 mark Class 12 · Accountancy · Cash Flow Statement
  1. Operating activity
  2. Investing activity
  3. Financing activity
  4. None of the above
Answer
Investing activity

The correct answer is Investing activity — Therefore, the correct classification is "Investing activity".

Step-by-step solution

  1. Identify the transaction as a sale of an existing fixed asset.
  2. Cash inflow from sale of an asset is reported under investing activities in the cash flow statement.
  3. Therefore, the correct classification is "Investing activity".
Common mistake: Mistaking sale of asset for operating activity

Concept tested: Classification of cash flows

Published · How this solution was prepared and checked

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