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Statement I… (Class 12 Accountancy SQP 2023-24, Q29a)

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AccountancyCBSE Class 12 · Sample paper, session 2023-24 · 1 mark · MCQ

CBSE Class 12 Accountancy sample paper 2023-24: question 29(a)

From the official CBSE sample question paper for 2023-24, section B-I, question 29(a), for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q29(a) · 1 mark · MCQCash Flow Statement

Statement I:- Sale of Marketable Securities will result in no flow of Cash.
Statement II:- Debentures issued as collateral security will result in inflow of cash.

  1. (A)Both Statements are correct.
  2. (B)Both Statements are incorrect.
  3. (C)Statement I is correct and Statement II is incorrect.
  4. (D)Statement I is incorrect and Statement I is correct.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

Are marketable securities cash equivalents?

Hint 2

Does a company receive money for debentures issued as collateral?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Marketable securities are cash equivalents, so selling them only converts one form of cash into another: no cash flow. Statement I is correct.

  2. Debentures issued as collateral security bring in no cash at all, so Statement II is incorrect. Option (C).

    1 mark

Answer: (C) Statement I is correct and Statement II is incorrect.

Where the marks are

  • Cash-equivalent conversion and collateral debentures (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Cash Flow Statement, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.