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      Question

      Under which of the following head will repayment of loan

      be shown in a cash flow statement?
      A Opening cash Correct Answer Incorrect Answer
      B Operating activity Correct Answer Incorrect Answer
      C Investing activity Correct Answer Incorrect Answer
      D Financing Activity Correct Answer Incorrect Answer
      E Closing cash Correct Answer Incorrect Answer

      Solution

      Cash flow from company’s capital structure i.e. changes in equity, debt, loans or dividends are accounted for in cash from financing. It is the sources or expenses relating to funding/financing of the company’s assets and operations. Repayment of loan is related to funding decision and is therefore, shown as a financing activity.

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