Question

Classify the following activity into operating activities, investing activities, financing activities or cash activities

"Proceeds from issuance of equity share capital."

Options

• Operating activities

• Investing activities

• Financing activities

• Cash activities

Answer 1

Financing activities

Explanation:

Financing activities concern an enterprise's long-term money or capital, such as cash flow through the sale of equity shares, debentures, raising long-term bank loans, and redemption of bank loans, among other things. Financing operations, according to AS-3, are actions that cause changes in the size and composition of the owners' capital.