To determine the cash flow from acquiring machinery, we look at the transaction details. The machinery was purchased for ₹ 3,50,000, and payment was made by issuing a cheque.
This means cash was paid out, resulting in a cash outflow.
Since the purchase of machinery is related to long-term assets, it falls under investing activities.
Therefore, the cash flow is:
Investing activity and outflow ₹ 3,50,000
The correct answer is Option 1.