Cash Flow Analysis

• Operating Activities: These are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing. It primarily includes receipts and payments related to the core business functions.
• Financing Activities: These activities result in changes in the size and composition of the equity capital and borrowings of the entity. Essentially, it deals with how the business finances its operations, either through debt or equity.
• Investing Activities: This involves the acquisition and disposal of long-term assets and other investments not included in cash equivalents. The sale of copyrights falls under this category, as copyrights are considered intangible assets. The sales transactions involve either gaining or losing such assets, which characteristically signify cash flow originating from investing activities.

• Sale of fixed asset: Cash received from selling a fixed asset is an inflow in Investing Activities because it involves the sale of a long-term asset. Therefore, (A) matches with (II).
• Purchase of Goodwill: Goodwill purchase requires cash outflow for an intangible asset, which falls under outflow in Investing Activities. So, (B) matches with (III).
• Tax Paid: Taxes generally relate to the core operations of a business and reflect cash outflows in the course of regular business operations, thus outflow in Operating Activities. Hence, (C) matches with (I).
• Dividend Paid: Paying dividends involves cash outflows to shareholders and is associated with financing as it impacts shareholders' equity, which is an outflow in Financing Activities. Consequently, (D) matches with (IV).

Final Answer

The cash flow from operating activities is ₹60,000.

Calculate the book value of the machine sold.
Sale proceeds = ₹13,000
Hence, there is a profit on sale = ₹3,000 (this is a non-cash item, ignored in investing activity)
Opening balance of machinery = ₹50,000 Less: Cost of machinery sold = ₹25,000 Add: Purchases = X Closing balance of machinery = ₹60,000 Cash flow from investing activities = Sale proceeds - Purchase Thus, the solution is Net cash used ₹22,000.

Let's analyze each option and match them appropriately:

(A) Subscription

• Subscription refers to donations or contributions made regularly by individuals or groups, and it is generally considered a revenue income for the year in which it is received.
  Therefore, (A) matches with (II) Revenue income for the year in which it is received.

(B) Endowment Fund

• An Endowment Fund is a fund that arises from a bequest or gift and is typically intended to provide a long-term income for the organization.
  Therefore, (B) matches with (IV) Fund arising from a bequest or gift.

(C) Cash subsidy received from the government

• A cash subsidy received from the government is generally a main source of income for Not for Profit organizations, often used to support their activities.
  Therefore, (C) matches with (III) Main source of income of Not for Profit organizations.

(D) Legacies

• Legacies refer to amounts received as per the will of a deceased person, often given as donations to an organization.
  Therefore, (D) matches with (I) Amount received as per the will of the deceased person.

Thus, the correct answer is (A): (A)-(II), (B)-(IV), (C)-(III), (D)-(I).

According to the definition provided in accounting standards, an investment qualifies as cash equivalents only if it has a short maturity of 3 months or less from the date of acquisition. This is because cash equivalents must be easily convertible into a known amount of cash and subject to an insignificant risk of changes in value.

Thus, the correct answer is (2): 3 months.