Multiple choice

What will be the effect of bonus issue in cash flow statement?

  1. It will be included in cash flow from investing activities.

  2. It will be included in cash flow from financing activities.

  3. It will not appear as no cash flow occurs as a result of a bonus issue.

  4. It will be included as part of cash flow from operations.

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A bonus issue of shares is a capitalization of reserves, there is no inflow of cash. Bonus issue offer additional shares to existing shareholders. Bousshare is actually so called bonus or stock dividend, do not affect cash flow.

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