Ownclasses

Which of the following transactions will result into 'Flow of Cash’?
(a) Deposited Rs 10,000 into bank.
(b) Withdrew cash from bank Rs 14,500.
(c) Sale of machinery of the book value of Rs 74,000 at a loss of Rs 9,000.
(d) Converted Rs 2,00,000 9% debentures into equity shares.

Answer

Flow of cash means the total amount of money being transferred into and out of a business, especially as affecting liquidity. In this question only option c amounts to cash flow. If a machinery of book value 74,000 Rs is sold at a loss of Rs 9,000, the cash inflow will be Rs 65,000. All other options do not constitute a flow of cash in any form but shows mere change in form of assets and liabilities.