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P P Limited is Share Broker Company. G G Limited is engaged in manufacturing of packaged food. P P Limited purchased 5,000 equity shares of Rs. 100 each of Savita Limited. G G Limited also purchased 10,000 equity shares of Rs. 100 each of Savita Limited. For the purpose of preparing their respective Cash Flow Statements, under which category of activities the purchase of shares will be classified by P P Limited and G G Limited?

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Accounts master

For GG limited it is an investment so it come in Investing Activity but as PP Ltd business is of selling shares so it will be part of Operating Activity :)
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Intellactual Education

Bedore answer this firstly we have to clear the concept of Stock & Assets , things purchased by a trader for resale purpose is considered as stock & for holding purpose considered as assets
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Tutor

For PP Ltd, it's a business and profit and loss will be shown in operation activity. And for GG Ltd, its investment activity.
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Tutor

Balakrishna as per AS-3 share purchase by P.P Ltd. comes under operating activities as selling and purchasing of shares is part of regular business of P.P Ltd and purchase of share by Savita ltd. comes in investing activities.
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Accounting Expert

PP Limited will classify this as Operating Activity because PP limited main business is to purchase and Selling of shares.GG limited will classify this as Investing Activities becuase it has invested .
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Accounting Expert

PP Limited will classify this as Operating Activity because PP limited main business is to purchase and Selling of shares.GG limited will classify this as Investing Activities becuase it has invested .
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ACCOUNTANCY CLASSES BY DHANA MURTHY

1) op.activity in pp ltd 2) INVESTING ACTVITY IN GG LTD
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Tutor

P P limited is an share broker company hence purchase of share of savita limited is operating activity hence cash out flow from operation. G G limited is not and investing/ share broking company hence it has invested the money in sarita limited, cash out flow from investing activities.
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Mentoring by a qualified person

In case of a share broker, it would be treated as operating activity as routine recurring activites. In case of other than investing concern it would be treated as investing activity.
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B.COM . CA Final pursuing

Investing activities.
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