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    Question

    ABC Ltd. issues debentures worth ₹5 lakh and uses ₹3

    lakh of it to purchase fixed assets. What is the net effect on funds from operations in the fund flow statement?
    A Increase by ₹5 lakh Correct Answer Incorrect Answer
    B Decrease by ₹3 lakh Correct Answer Incorrect Answer
    C Increase by ₹2 lakh Correct Answer Incorrect Answer
    D No effect Correct Answer Incorrect Answer

    Solution

    Raising funds = inflow Asset purchase = outflow Net = ₹5 lakh – ₹3 lakh = ₹2 lakh net inflow

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