CUET CUET Accountancy 2024 - While preparing Cash Flow Statement, purchase of goodwill is treated as: | PYQs + Solutions

CUET Accountancy 2024

Accountancy

Cash Flow Statement

Easy

While preparing Cash Flow Statement, purchase of goodwill is treated as:

Operating activity

Financing activity

Investing activity

Extraordinary item

Correct Option: 3

When making a Cash Flow Statement, we categorize cash flows into three main activities: operating, investing, and financing.

Goodwill purchase is related to acquiring a business or asset, which falls under investing activities.

So, when you buy goodwill, it shows up in the investing section of the Cash Flow Statement.

Therefore, the correct answer is: Investing activity.