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Which of the… (Class 12 Accountancy SQP 2024-25, Q29b)

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AccountancyCBSE Class 12 · Sample paper, session 2024-25 · 1 mark · MCQ

CBSE Class 12 Accountancy sample paper 2024-25: question 29(b)

From the official CBSE sample question paper for 2024-25, section B-I, question 29(b), for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q29(b) · 1 mark · MCQCash Flow Statement

Which of the following statements is correct?

  1. (A)Investments in shares are excluded from cash equivalents unless they are in, substance, cash equivalents.
  2. (B)Short-term marketable securities which can be readily converted into cash are not treated as cash equivalents
  3. (C)In case of a financial enterprise, interest received, and dividend received are classified as investing activities while dividend paid and interest paid on debentures are operating activities.
  4. (D)Provision for tax made during the year should be classified as an outflow from operating activity.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2024-25.

Hints

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

Hint 1

Check each statement against AS 3.

Hint 2

For a financial enterprise, interest and dividend received are operating.

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. AS 3 excludes equity investments from cash equivalents unless they are cash equivalents in substance (e.g. preference shares bought shortly before their redemption date), so (A) is right.

  2. (B) is wrong (such securities are cash equivalents), (C) is wrong (for a financial enterprise interest and dividend received are operating), and (D) is wrong (tax paid, not provided, is the outflow). Option (A).

    1 mark

Answer: (A) Investments in shares are excluded from cash equivalents unless they are in, substance, cash equivalents.

Where the marks are

  • AS 3 treatment of investments in shares (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 2024-25: 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.