A firm builds machines to rent out and later sells them. The build cost is:
AA financing outflow
BAn investing outflow
CAn operating outflow
DA non-cash item
Answer & Solution
Correct answer: C. An operating outflow
Assets made for rental and then held for sale are treated like inventory, so their cost and later receipts are operating.
Keep practising Ind AS 7 Statement of Cash Flows
Browse all Ind AS 7 Statement of Cash Flows questions for CA Final, or explore more Financialreporting topics.
Related questions
A non-financial entity received dividend Rs 12 and interest Rs 8, paid dividend 30 and intCash 20, demand deposit 60, 2-month T-bill 30, 9-month FD 40, integral overdraft 25. TotalAll sales Rs 900 are on credit; receivables rose from 80 to 110. Cash collected from custoCash share issue 200, debt converted 500, loan raised 100, repaid 60, dividend 40. Net finPlant with book value Rs 55 lakh sold for Rs 40 lakh cash. Investing inflow?Opening cash equivalents Rs 120; operating +300, investing -180, financing -50. Closing baPBT Rs 500 lakh after depreciation 80, finance cost 40, interest income 25. Operating profAn increase in a non-cash current asset is, in the indirect method: