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    Home » NCERT Solutions for Class 12 Accountancy – Company Accounts and Analysis of Financial Statements Chapter 6 – Cash Flow Statement
    Class 12 Accountancy

    NCERT Solutions for Class 12 Accountancy – Company Accounts and Analysis of Financial Statements Chapter 6 – Cash Flow Statement

    AdminBy AdminUpdated:May 9, 202334 Mins Read
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    Short answers : Solutions of Questions on Page Number : 285


    Q1 :What is a Cash Flow Statement?
    Answer :  A Cash Flow Statement is a statement showing inflows and outflows of cash and cash equivalents from operating, investing and financing activities of a company during a particular period. It explains the reasons of receipts and payments in cash and change in cash balances during an accounting year in a company.


    Q2 :How are the various activities classified (as per AS-3 revised) while preparing cash flow statement?
    Answer : As per the Revised Accounting Standard 3 (AS-3), preparation of Cash Flow Statement for each period is mandatory. AS-3 also specifies the classification of all inflows and outflows basically under the following heads:
    1. Cash Flow from Operating Activities
    2. Cash Flow from Investing Activities
    3. Cash Flow from Financing Activities


    Q3 :State the uses of cash flow statement?
    Answer :  The uses of cash flow statement are as follows:
    1. It is useful for short term financial planning about inflows and outflow of cash.
    2. It helps in analysing the reason for the change in cash and cash equivalent balances of a company
    3. It assists in determining and assessing liquidity and solvency positions of a company.
    4. It enables to analyse and study the trends of receipts and payments of cash from various activities of a company and thereby helps in drafting various policy measures and short term planning.
    5. It enables the segregation of cash flows from operating, investing and financing activities of the business separately.
    6. It assists in making decision about distribution of profit with reference to the availability of cash.


    Q4 :What are the objectives of preparing cash flow statement?
    Answer : The important objectives for preparing Cash Flow Statement are as follows:
    1. The most important objective that is fulfilled by preparing Cash Flow Statement is to ascertain the gross inflows and outflows of cash and cash equivalents from various activities.
    2. Secondly, Cash Flow Statement helps in analysing various reasons responsible for change in the cash balances during an accounting year.
    3. This statement helps in analysing and understanding the liquidity and solvency of a company , thereby, depicting the true liquidity position to the creditors and the investors.
    4. Cash Flow Statement also helps in ascertaining the requirement and availability of cash in near future.


    Q5 :What are the objectives of preparing cash flow statement?
    Answer :  The important objectives for preparing Cash Flow Statement are as follows:
    1. The most important objective that is fulfilled by preparing Cash Flow Statement is to ascertain the gross inflows and outflows of cash and cash equivalents from various activities.
    2. Secondly, Cash Flow Statement helps in analysing various reasons responsible for change in the cash balances during an accounting year.
    3. This statement helps in analysing and understanding the liquidity and solvency of a company , thereby, depicting the true liquidity position to the creditors and the investors.
    4. Cash Flow Statement also helps in ascertaining the requirement and availability of cash in near future.


    Q6: Explain the terms: Cash Equivalents, Cash flows.
    Answer :  Cash equivalents are short term, highly liquid investments that are easily convertible into cash and which are subject to an insignificant risk of change in value. In other words, cash equivalents are held for the purpose of meeting short term cash commitments rather than for investment or any other purpose. An investment held for short-term maturity, say three months can be regarded as cash equivalent. Some examples of cash equivalents are treasury bills, commercial papers, etc. On the other hand, cash flows are inflows and outflows of cash and cash equivalents. A cash inflow results in increase in the total cash balance and a cash outflow results in decrease in the total cash balance.


    Q7 : Prepare a format of cash flow from operating activities under direct method and indirect method.
    Answer :
    The format of cash flow from operating activities is as follows:

    Direct Method

    Cash Flow from Operating Activities:

    Cash receipts from customers

    ***

    Cash paid to suppliers and employers

    (***)

    Cash generated from operations

    ***

    Income tax paid

    (***)

    Cash flow before extraordinary items

    ***

    +/– Extraordinary items

    ***

    Net Cash from operating activities

    ***

    Indirect Method

    Cash Flow from Operating Activities:

    Net Profit before tax and extraordinary items

    ***

    Add:

    Non-Cash Expenses and Non-Operating Expenses

    Depreciation

    **

    Goodwill

    **

    Interest paid

    **

    Loss on sale of fixed assets

    **

    Foreign exchange

    **

    **

    Less:

    Non Operating Incomes.

    Dividend received

    **

    Profit on sale of fixed assets

    **

    Interest received

    **

    **

    Operating profit before working capital changes

    ***

    Add: Decrease in Current Assets

    ***

    Increase in Current Liabilities

    ***

    ***

    Less: Increase in Current Assets

    ***

    Decrease in Current Liabilities

    ***

    ***

    Cash generated from Operating Activities

    ***

    Income tax paid

    ***

    Cash Flow before Extraordinary Items

    ***

    Add/Less: Extra ordinary Items

    ***

    Net Cash Flow from Operating Activities

    ***

    Note: Preparation of Cash Flow Statement using Direct Method has been excluded from the prescribed syllabus. The format is given since the question has not specified the method explicitly. Students can refer to the direct method for the knowledge purpose.


    Q8 : Now that you know the meaning of operating activities, state clearly what would constitute the operating activities for the following types of enterprises:
    (i) Hotel
    (ii) Film production house
    (iii) Financial enterprise
    (iv) Media enterprise
    (v) Steel manufacturing unit
    (vi) Software business unit.
    Answer :
    (i) Hotels

    1. Receipts from sale of goods to customer.
    2. Payment of wages and salaries, electricity, food items and other items used in accommodation.
    (ii) Film Production House:
    1. Receipts from selling film rights of a film to the distributors.
    2. Payment to the staff, actors, actresses, directors, etc.
    (ii) Financial Enterprises:
    1. Receipts from repayment of loans, interest incomes from investments, etc.
    2. Repayment of loans, recovery expenditure for recover of loans etc, salaries of employees.
    (iv) Media Enterprises:
    1. Receipts from advertisements.
    2. Payments to staff, reporters, photographers, etc.
    (v) Steel Manufacturing Unit:
    1. Receipts from sale of steel sheets, steel castings, steel rods, etc.
    2. Payment for iron, coal, salaries to staff, etc.
    (vi) Software Business Unit:
    1. Receipts from sale of software and renewal of licenses.
    2. Payment of salaries to their employees, etc.


    Q9: “The nature/type of enterprise can change altogether the category into which a particular activity may be classified.” Do you agree? Illustrate your answer?
    Answer:    Yes, the nature or type of an enterprise can change the category into which a particular activity may be classified. This can be better understood with the help of an example of two firms. One engaged in financial services and the other engaged in manufacturing services. For the firm that is engaged in financial services, interests received or paid are classified under operating activities whereas for the firm that is engaged in manufacturing business, interests paid are classified under financing activities and interest received as investing activities. Therefore, the classification of activities depends on the nature and type of enterprise.


    Q10 :Describe the procedure to prepare Cash Flow Statement.
    Answer : The procedure to prepare Cash Flow Statement is described in the following steps in their chronological order.
    Step 1: Ascertain the cash flows from operating activities
    Step 2: Ascertain the cash flows from investing activities
    Step 3: Ascertain the cash flows from financing activities
    Step 4: Ascertain net increase or decrease by summing up the amounts of Steps 1, 2, and 3.
    Step 5: Write the opening balance of cash and cash equivalents and deduct it from the amount ascertained in Step 4. The resulting figure arrived is the Closing Balance of Cash and Cash Equivalents.
    There are two methods viz. Direct Method and Indirect Method for the preparation of Cash Flow Statement.

    Direct Method

     

    Cash Flow Statement

     

    Particulars

    Amount

    Rs

    Amount

    Rs

    A.

    Cash Flow from Operating Activities

    Cash Sales

    **

    Cash receipt from Debtors

    **

    Less: Cash Purchases

    **

    Cash paid to creditors and other expenses

    **

    Cash Generated from Operating Activities

    **

    Less: Income Tax Paid

    **

    Cash flow before Extraordinary Items

    **

    Add/Less: Extraordinary Items

    **

    Net Cash Flow from (used in) Operating Activities

    **

    **

    B.

    Cash Flow from Investing Activities

    **

    Sale of Fixed Assets

    **

    Sale of long-term Investments

    **

    Interest Received

    **

    Dividend Received

    **

    Rent Received

    **

    Less: Purchase of Fixed Assets

    **

    Less: Purchase of long-term Investment

    **

    Net Cash Flow from Investing Activities

    **

    **

    C.

    Cash Flow from Financing Activities

    Proceeds from Issue of Shares

    **

    Proceeds from Issue of Debentures and Other Long-term Borrowings

    **

    Less: Repayment of Debentures and Other Long-term Borrowings

    **

    Less: Redemption of Preference Shares

    **

    Less: Interest Paid

    **

    Less: Dividend Paid

    **

    Net Cash flow from Financing Activities

    **

    **

    Net Increase (or Decrease in Cash and Cash Equivalents (A+B+C)

    **

    Cash and Cash Equivalents at the beginning (Cash in Hand,

    Cash at Bank, Marketable Securities, Short-term Deposits)

    **

    Cash and Cash Equivalent at the end

    **

     

    Indirect Method

    Cash Flow Statement

    Particulars

    Amount

    Rs

    Amount

    Rs

    A.

    Cash Flow from Operating Activities:

    Net Profit before tax and extraordinary items

    ***

    Add: Non-Cash Expenses and non operating expenses.

    Depreciation

    **

    Goodwill

    **

    Interest paid

    **

    Loss on sale of fixed assets

    **

    **

    Less:

    Non-Operating Incomes.

    Dividend received

    **

    Profit on sale of fixed assets

    **

    Interest received

    **

    **

    Operating Profit before Working Capital Changes

    ***

    Add: Decrease in Current Assets

    ***

    Increase in Current Liabilities

    **

    ***

    Less: Increase in Current Assets

    ***

    Decrease in Current Liabilities

    ***

    ***

    Cash generated from Operating Activities

    ***

    Less: Income tax paid

    ***

    Cash flow before Extra ordinary items

    ***

    Add/Less: Extra ordinary items

    ***

    Net Cash Flow from Operating Activities

    ***

    B.

    Cash Flow from Investing Activities

    **

    Sale of Fixed Assets

    **

    Sale of Long-term Investments

    **

    Interest Received

    **

    Dividend Received

    **

    Rent Received

    **

    Less: Purchase of Fixed Assets

    **

    Less: Purchase of long term Investment

    **

    Net Cash Flow from Investing Activities

    **

    **

     

    C.

    Cash Flow from Financing Activities

    Proceeds from Issue of shares

    **

    Proceeds from Issue of Debentures and other Long-term Borrowings

    **

    Less: Repayment of Debentures and other Long-term Borrowings

    **

    Less: Redemption of preference Share

    **

    Less: Interest paid

    **

    Less: Dividend paid

    **

    Net Cash Flow from Financing Activities

    **

    **

    Net Increase (or Decrease in Cash and Cash Equivalents (A+B+C)

    **

    Cash and Cash Equivalents at the beginning (Cash in Hand, Cash at Bank, Marketable Securities, Short-term Deposits)

    **

    Cash and Cash Equivalents at the end

    **

     

    Note: Preparation of Cash Flow Statement using Direct Method has been excluded from the prescribed syllabus. The format is given since the question has not specified the method explicitly. Students can refer to the direct method for the knowledge purpose.


    Q11: Describe”Indirect” method of ascertaining Cash Flow from Operating Activities.
    Answer:
    Indirect Method: This method starts with the Net Profit before tax and extraordinary items. For this purpose, the Net Profit as revealed by the Profit and Loss Account cannot be taken into consideration as there exists some items which do not leads to outflow of cash. The following are those items that need to be added back to the Net Profit of the Profit and Loss Account.
    a. Non-cash items like, depreciation goodwill written off, etc are added to the Net Profit.
    b. Non-operating expenses like loss on sale of fixed assets, transfers to reserves, loss on sale of fixed assets are added back to the Net Profit.
    c. Provisions like, provisions for doubtful debts and discount for debtors, proposed dividends etc. should be added back to the Net Profit.
    d. Decrease in current assets and increase in current liabilities should be added to the operating profit
    The following are those items that need to deduct from the Net Profit of the Profit and Loss Account.
    a. Non-operating incomes like profit on sale of fixed assets, etc. are deducted from the Net Profit.
    b. Non-trading Incomes like dividend received, interest received, tax refund, etc. are to be deducted from the Net Profit.
    c. Increase in current assets and decrease in current liabilities should be deducted from the operating profit.

    Indirect Method

     

    Cash Flow Statement

     

    Particulars

    Amount

    Rs

    Amount

    Rs

    Cash Flow from Operating Activities:

    Net Profit before tax and extraordinary items

    ***

    Add: Non-Cash Expenses and Non-Operating Expenses.

    Depreciation

    **

    Goodwill

    **

    Interest paid

    **

    Loss on sale of fixed assets

    **

    **

    Less:

    Non-Operating Incomes.

    Dividend received

    **

    Profit on sale of fixed assets

    **

    Interest received

    **

    **

    Operating Profit before Working Capital Changes

    ***

    Add: Decrease in Current Assets

    ***

    Increase in Current Liabilities

    **

    ***

    Less: Increase in Current Assets

    ***

    Decrease in Current Liabilities

    ***

    ***

    Cash generated from Operating Activities

    ***

    Less: Income tax paid

    ***

    Cash flow before Extra ordinary items

    ***

    Add/Less: Extra ordinary items

    ***

    Net Cash Flow from Operating Activities

    ***


    Q12:Explain the major Cash Inflow and outflows from investing activities.
    Answer:

    Investing activities are those activities that are related to sales and purchases of long-term fixed assets like, land and building, plant and machinery, furniture, etc. These fixed assets are not held for resale. The activities like sale and purchase of investments that are not included in the cash equivalents are also included in Investing activities. Any income arising from such investments (assets) are regarded a part of investing activities.
    As per the AS3, the major cash inflows and outflows from investing activities are as follows:
    a. Cash payments to acquire fixed assets (including intangibles like, goodwill). These payments include capitalised cost of research and development and self constructed fixed assets.
    b. Cash receipts from disposal of fixed assets (including intangible assets).
    c. Cash payments to acquire shares, warrants, or debt instruments of other enterprises and interest in joint venture (other than payments of those instruments consider as cash equivalents and are held for the trading purposes).
    d. Cash receipts from disposal of shares, warrants or debt instruments of other enterprises and interest from joint ventures (other than receipts from those held for trading purposes).
    e. Cash advances and loans made to third parties (other than advances, and loans made by financial enterprises). These will be treated as cash flows from the operating activities.
    f. Cash receipts from repayment of advances and loans made to third parties (other than advances and loans of financial enterprises). These will be treated as
    cash flows from operating activities.
    g. Cash receipts from insurance company for any property involved in accident.
    h. Any income arising from fixed assets or investments like interest, dividend, rent etc. In case of financial enterprises interest and dividend is treated as operating activities.

    Direct Method

    Cash Flow Statement

    Particulars

    Amount

    Rs

    Amount

    Rs

    Net Cash Flow from (used in) Operating Activities

    **

    **

    B.

    Cash Flow from Investing Activities

    **

    Sale of Fixed Assets

    **

    Sale of long-term Investments

    **

    Interest Received

    **

    Dividend Received

    **

    Rent Received

    **

    Less: Purchase of Fixed Assets

    **

    Less: Purchase of long-term Investments

    **

    Net Cash Flow from Investing Activities

    **

    **

    Indirect Method

    Cash Flow Statement

    Particulars

    Amount

    Rs

    Amount

    Rs

    Net Cash Flow from Operating Activities

    ***

    Cash Flow from Investing Activities

    **

    Sale of Fixed Assets

    **

    Sale of Long-term Investments

    **

    Interest Received

    **

    Dividend Received

    **

    Rent Received

    **

    Less: Purchase of Fixed Assets

    **

    Less: Purchase of long term Investment

    **

    Net Cash Flow from Investing Activities

    **

    **

    Note: Preparation of Cash Flow Statement using Direct Method has been excluded from the prescribed syllabus. The format is given since the question has not specified the method explicitly. Students can refer to the direct method for the knowledge purpose.


    Q13: Explain the major Cash Inflows and outflows from financing activities.
    Answer: Financing activities are those activities that are related to capital or long term funds of an enterprise. These activities results in the change in the capital and borrowed funds.
    As per the AS3, the major cash inflows from financing activities are as follows:
    a. Cash proceeds from issue of shares and other similar instruments.
    b. Cash proceeds from issue of debentures, loans, notes, bonds, and other short and long-term borrowings.
    As per the AS3, the major cash outflows from financing activities are as follows:
    a. Cash repayments of the amount borrowed in form of debentures, loans, notes bonds, and other short and long-term borrowings.
    b. Buy-back of shares and debentures.
    c. Interest paid on debentures, loans, and advances.
    d. Dividend paid to the preference shareholders and equity shareholders.
    An important point that must be noted is that the purchase and sale of securities, interest paid or received and dividend received is treated as cash flow from operating activities for an investment company. But dividend paid is treated as cash flow from financing activities.

    Direct Method

    Cash Flow Statement

    Particulars

    Amount

    Rs

    Amount

    Rs

    Net Cash Flow from Investing Activities

    **

    **

    Cash Flow from Financing Activities

    Proceeds from Issue of Shares

    **

    Proceeds from Issue of Debentures and Other Long-term Borrowings

    **

    Less: Repayment of Debentures and Other Long-term Borrowings

    **

    Less: Redemption of Preference Shares

    **

    Less: Interest Paid

    **

    Less: Dividend Paid

    **

    Net Cash flow from Financing Activities

    **

    **

    Net Increase (or Decrease in Cash and Cash Equivalents (A+B+C)

    **

    Cash and Cash Equivalents at the beginning (Cash in Hand,

    Cash at Bank, Marketable Securities, Short-term Deposits)

    **

    Cash and Cash Equivalent at the end

    **

    Indirect Method

    Cash Flow Statement

    Particulars

    Amount

    Rs

    Amount

    Rs

    Net Cash Flow from Investing Activities

    **

    **

    Cash Flow from Financing Activities

    Proceeds from Issue of shares

    **

    Proceeds from Issue of Debentures and other Long-term Borrowings

    **

    Less: Repayment of Debentures and other Long-term Borrowings

    **

    Less: Redemption of preference Share

    **

    Less: Interest paid

    **

    Less: Dividend paid

    **

    Net Cash Flow from Financing Activities

    **

    **

    Net Increase (or Decrease in Cash and Cash Equivalents (A+B+C)

    **

    Cash and Cash Equivalents at the beginning (Cash in Hand,

    Cash at Bank, Marketable Securities, Short-term Deposits)

    **

    Cash and Cash Equivalents at the end

    **

    Note: Preparation of Cash Flow Statement using Direct Method has been excluded from the prescribed syllabus. The format is given since the question has not specified the method explicitly. Students can refer to the direct method for the knowledge purpose.


    Q14: Anand Ltd. arrived at a net income of Rs 5,00,000 for the year ended March 31, 2007. Depreciation for the year was Rs 2,00,000. There was a gain of Rs 50,000 on assets sold which was credited to profit and loss account. Bills Receivables increased during the year Rs 40,000 and Bills Payables also increased by Rs 60,000. Compute the cash flow operating activities by the indirect approach.
    Answer:

    Cash Flow from Operating Activities as on March 31, 2007

    Particulars

    Amount

    Rs

    Amount

    Rs

    Net Profit during the year

    5,00,000

    Items to be adjusted:

    Add: Depreciation

    2,00,000

    Less: Gain on sale of assets

    (50,000)

    1,50,000

    Operating Profit before Working Capital changes

    6,50,000

    Add: Increase in Bills Payable

    60,000

    Less: Increase in Bills Receivable

    (40,000)

    20,000

    Net Cash from Operations

    6,70,000

     


    Q15: From the information given below you are required to prepare the cash paid for the inventory:

    Rs

    Inventory in the beginning

    40,000

    Purchases

    1,60,000

    Inventory in the end

    38,000

    Trade payables in the beginning

    14,000

    Trade payables in the end

    14,500

    Answer:

    Trade Payables Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    Cash (Balancing fig.)

    1,59,500

    Balance b/d

    14,000

    Balance c/d

    14,500

    Purchases

    1,60,000

    1,74,000

    1,74,000

    Cash paid for Inventory amounts to Rs 1,59,500


    Q16: For each of the following transactions, calculate the resulting cash flow and state the nature of cash flow viz., operating, investing and financing
    Acquired machinery for Rs 2,50,000 paying 20% drawn and executing a bond for the balance payable
    (b) Paid Rs 2,50,000 to acquire shares in Informa Tech. and received a dividend of Rs 50,000 after acquisition.
    (c) Sold machinery of original cost Rs 2,00,000 with an accumulated depreciation of Rs 1,60,000 for Rs 60,000.
    Answer:

    (a)

    Part payment Rs 50,000 for acquiring machinery Rs 2,50,000 is related with Investing Activities

    (b)

    Rs

    Amount paid for acquiring shares

    (2,50,000)

    Dividend received

    50,000

    Net Cash used in Investing Activities

    (2,00,000)

    Amount paid to acquire assets and dividend received is a part of Investing Activities.
    (c) Inflow of cash of Rs 60,000 on sale of machinery is a part Investing Activities.

     


    Q17:The following is the Profit and Loss Account of Yamuna Limited:

    Statement of Profit and Loss of Yamuna Ltd.

    for the Year ended March 31, 2013

    Particulars

    Note No.

    Amount

    (Rs)

    i)

    Revenue from Operations

    10,00,000

    ii)

    Expenses

    Cost of Material Consumed

    1

    50,000

    Purchase of Stock-in-trade

    5,00,000

    Other Expenses

    2

    3,00,000

    Total Expenses

    8,50,000

    iii)

    Profit before Tax (I – ii)

    1,50,000

    Additional information:
    (i) Trade receivables decrease by Rs 30,000 during the year.
    (ii) Prepaid expenses increase by Rs 5,000 during the year.
    (iii) Trade creditors decrease by Rs 15,000 during the year.
    (iv) Outstanding expenses payable increased by Rs 3,000 during the year.
    (v) Operating expenses included depreciation of Rs 25,000.
    Compute net cash provided by operations for the year ended March 31, 2013 by the indirect method.

    Answer:

    Cash Flow from Operating Activities of Yamuna Limited as on March 31, 2013

    Particulars

    Amount

    Rs

    Amount

    Rs

    Net Profit earned during the year

    1,50,000

    Items to be added:

    Depreciation

    25,000

    Operating Profit before Working Capital changes

    1,75,000

    Add:

    Increase in Current Liabilities

    Outstanding Expenses

    3,000

    Add:

    Decrease in Current Assets

    Trade Receivables

    30,000

    Stock

    50,000

    83,000

    Less:

    Decrease in Current Liabilities

    Trade Creditors

    (15,000)

    Less:

    Increase in Current Assets

    Prepaid Expenses

    (5,000)

    (20,000)

    Net Cash from Operations

    2,38,000

    As per the solution, the Net Cash from Operating Activities is Rs 2,38,000, however, as per the answer given in the book is Rs 2,18,000.


    Q18: Compute cash from operations from the following figures:
    (i) Profit for the year 2013-14 is a sum of Rs. 10,000 after providing for depreciation of Rs. 2,000.
    (ii) The current assets of the business for the year ended March 31, 2013 and 2014 are as follows:

    March
    31, 2013
    (Rs.)
    March
    31, 2014
    (Rs.)
    Trade Receivables 14,000 15,000
    Provision for Doubtful Debts 1,000 1,200
    Trade Payables 13,000 15,000
    Inventories 5,000 8,000
    Short-term Investments 10,000 12,000
    Expenses payable 1,000 1,500
    Prepaid Expenses 2,000 1,000
    Accrued Income 3,000 4,000
    Income received in advance 2,000 1,000

    Answer:

    Cash Flow Statement

    for the Year Ending March 31, 2014

    Particulars

    Details

    (Rs)

    Amount

    (Rs)

    Cash from Operating Activities

    Net Profit

    10,000

    Items to be added:

    Depreciation

    2,000

    2,000

    Operating Profit before Working Capital Adjustments

    12,000

    Less: Increase in Current Assets

    Trade Receivables

    (1,000)

    Accrued Income

    (1,000)

    Short-term Investments

    (2,000)

    Inventories

    (3,000)

    Add: Increase in Current Liabilities

    Provision for Doubtful Debts

    200

    Trade Payables

    2,000

    Expense Payable

    500

    Add: Decrease in Current Assets

    Prepaid Expenses

    (1,000)

    Less: Decrease in Current Liabilities

    Income received in advance

    1,000

    Net Cash From Operating Activities

    7,700


    Q19: From the following particulars of Bharat Gas Limited, calculate Cash Flows from Investing Activities. Also show the workings clearly preparing the ledger accounts:

    Balance Sheet of Bharat Gas Ltd. as on ………….
    Particulars Note No. Figures as the end of 2011
    (Rs)
    Figures as at the
    end of reporting 2010
    (Rs)
    II) Assets
    1. Non-current Assets
    a) Fixed assets
    i) Tangible assets
    1 12,40,000 10,20,000
    ii) Intangible assets
    2 4,60,000 3,80,000
    b) Non-current investments
    3 3,60,000 2,60,000
    Notes 1 Tangible assets = Machinery
    2 Intangible assets = Patents

    Notes

    Figures of current year Figures of previous year
    1. Tangible Assets
    Machinery
    12,40,000 10,20,000
    2. Intangible Assets
    Goodwill
    3,00,000 1,00,000
    Patents
    1,60,000 2,80,000
    4,60,000 3,80,000
    3. Non-current Investments
    10% long term investments
    1,60,000 60,000
    Investment in land
    1,00,000 1,00,000
    Shares of Amartex Ltd.
    1,00,000 1,00,000
    3,60,000 2,60,000

    Additional Information:
    (a) Patents were written-off to the extent of Rs. 40,000 and some Patents were sold at a profit of Rs. 20,000.
    (b) A Machine costing Rs. 1,40,000 (Depreciation provided thereon Rs. 60,000) was sold for Rs. 50,000. Depreciation charged during the year was Rs. 1,40,000.
    (c) On March 31, 2007, 10% Investments were purchased for Rs. 1,80,000 and some Investments were sold at a profit of Rs. 20,000. Interest on Investment was received on March 31, 2011.
    (d) Amartax Ltd. paid Dividend @ 10% on its shares.
    (e) A plot of Land had been purchased for investment purposes and let out for commercial use and rent received Rs. 30,000.
    Answer:

    Cash Flow from Investing Activities

    Particulars

    Amount

    Rs

    Amount

    Rs

    Cash Inflow

    Proceeds from Sale of Patents

    1,00,000

    Proceeds from Sale of Machinery

    50,000

    Proceeds from Sale of 10% Long-term Investment

    1,00,000

    Interest received on 10% Long-term Investment

    6,000

    Dividend Received from Amartax Ltd.

    10,000

    Rent Received

    30,000

    2,96,000

    Cash Outflow

    Purchase of Goodwill

    (2,00,000)

    Purchase of Machinery

    (4,40,000)

    Purchase of 10% Long-term Investment

    (1,80,000)

    (8,20,000)

    Net Cash used in Investing Activities

    (5,24,000)

    Patents Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    Balance b/d

    2,80,000

    Profit and Loss (written off)

    40,000

    Profit and Loss (Profit on sale)

    20,000

    Bank (sale- Balancing figure)

    1,00,000

    Balance c/d

    1,60,000

    3,00,000

    3,00,000

    Machinery Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    Balance b/d

    10,20,000

    Depreciation

    1,40,000

    Bank (Purchases- Balancing figure)

    4,40,000

    Bank

    50,000

    Profit and Loss

    30,000

    Balance c/d

    12,40,000

    14,60,000

    14,60,000

    10% Long-term Investment Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    Balance b/d

    60,000

    Bank (Balancing figure)

    1,00,000

    Bank

    1,80,000

    Profit and Loss (Profit on sale)

    20,000

    Balance c/d

    1,60,000

    2,60,000

    2,60,000

     


    Q20: From the following Balance Sheet of Mohan Ltd. Prepare cash flow Statement:

    Balance Sheet of Mohan Ltd.
    as at ………………………. 2013
    Particulars Note No. 2011
    (Rs)
    2010
    (Rs)
    I) Equity and Liabilities
    1. Shareholders’ Funds
    a) Equity share capital
    3,00,000 2,00,000
    b) Reserves and surplus
    2,00,000 1,60,000
    2. Non-current liabilities
    a) Long-term borrowings
    1 80,000 1,00,000
    3. Current liabilities
    Trade payables
    1,20,000 1,40,000
    Short-term provisions
    2 70,000 60,000
    Total 7,70,000 6,60,000
    II) Assets
    1. Non-current assets
    a) Fixed assets
    3 5,00,000 3,20,000
    2. Current assets
    a) Inventories
    1,50,000 1,30,000
    b) Trade receivables
    4,90,000 1,20,000
    c) Cash and cash equivalents
    5,30,000 90,000
    Total 7,70,000 6,60,000

    Notes

    2011 2010
    1. Long-term borrowings
    Bank Loan
    80,000 1,00,000
    2. Short-term provision
    Proposed dividend
    70,000 60,000
    3. Fixed assets 6,00,000 4,00,000
    Less: Accumulated Depreciation
    1,00,000 80,000
    (Net) Fixed Assets
    5,00,000 3,20,000
    4. Trade receivables
    Debtors
    60,000 1,00,000
    Bills receivables
    30,000 20,000
    90,000 1,20,000
    5. Cash and cash equivalents
    Bank
    30,000 90,000

    Additional Information:
    Machine Costing Rs. 80,000 on which accumulated depreciation was Rs. 50,000 was sold for Rs. 20,000.
    Answer:

    Cash Flow Statement of Mohan Ltd.

    Particulars

    Amount

    Rs

    Amount

    Rs

    A.

    Cash Flow from Operating Activities

    Profit as per the Balance Sheet (2,00,000 – 1,60,000)

    40,000

    Proposed Dividend

    70,000

    Net Profit before Taxation and Extraordinary items

    1,10,000

    Adjustments:

    Depreciation

    70,000

    Loss on Sale of Machine

    10,000

    80,000

    Operating Profit before Working Capital changes

    1,90,000

    Add:

    Decrease in Current Assets

    Debtors

    40,000

    40,000

    2,30,000

    Less:

    Increase in Current Assets

    Inventories

    (20,000)

    Bills Receivable

    (10,000)

    Less:

    Decrease in Current Liabilities

    Trade Payables

    (20,000)

    (50,000)

    Net Cash from Operations

    1,80,000

    B.

    Cash Flow from Investing Activities

    Proceeds from Sale of Fixed Assets

    20,000

    Purchases of Fixed Assets

    (2,80,000)

    Net Cash outflow from Investing activity

    (2,60,000)

    C.

    Cash Flow from Financing Activities

    Issue of Shares

    1,00,000

    Bank Loan Paid

    (20,000)

    Dividend Paid

    (60,000)

    Net Cash from Financing Activities

    20,000

    D.

    Net Decrease in Cash and Cash Equivalents (A+B+C)

    (60,000)

    Add:

    Cash and Cash Equivalents in the beginning

    90,000

    E.

    Cash and Cash equivalents at the end

    30,000

    Fixed Assets Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    Balance b/d

    4,00,000

    Bank

    20,000

    Bank (Purchases- Balancing fig.)

    2,80,000

    Profit and Loss

    10,000

    Accumulated Depreciation

    50,000

    Balance c/d

    6,00,000

    6,80,000

    6,80,000

    Accumulated Depreciation Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    Fixed Assets

    50,000

    Balance b/d

    80,000

    Balance c/d

    1,00,000

    Profit and Loss (Balance fig.)

    70,000

    1,50,000

    1,50,000

     


    Q21: From the following Balance Sheets of Tiger Super Steel Ltd., prepare Cash Flow Statement:

    Balance Sheet of Tiger Super Steel Ltd.
    Particulars Note No. 2011
    (Rs)
    2010
    (Rs)
    I) Equity and Liabilities
    1. Shareholders’ Funds
    a) Share capital
    1 1,30,000 2,00,000
    b) Reserves and surplus
    2 22,800 15,200
    2. Current Liabilities
    a) Trade payables
    3 21,200 14,000
    b) Other current liabilities
    4 2,400 3,200
    c) Short-term provisions
    5 38,400 22,400
    Total 2,14,800 1,74,800
    II) Assets
    1. Non-Current Assets
    a) Fixed assets
    i) Tangible assets
    6 96,400 76,000
    ii) Intangible assets
    18,800 24,000
    b) Non-current investments
    14,000 4,000
    2. Current assets
    a) Inventories
    31,200 34,000
    b) Trade receivables
    43,200 30,000
    c) Cash and cash equivalents
    11,200 6,800
    Total 2,14,800 1,74,800

    Notes

    2011 2010
    1. Share Capital
    Equity share capital
    1,20,000 80,000
    10% Preference share capital
    20,000 40,000
    1,40,000 1,20,000
    2. Reserves and Surplus
    General reserve
    12,00 8,000
    Balance in statement of profit and loss
    10,800 7,200
    22,800 15,200
    3. Trade payables
    Bills payable
    21,200 14,000
    4. Other current liabilities
    Outstanding expenses
    2,400 3,200
    5. Short-term provisions
    Provision for taxation
    12,800 11,200
    Proposed dividend
    15,600 11,200
    38,400 22,400

    Answer:

    Cash Flow Statement of Tiger Super Steels Ltd

    Particulars

    Amount

    Rs

    Amount

    Rs

    A.

    Cash Flow from Operating Activities

    Profit as per the Balance Sheet (10,800 –7,200)

    3,600

    General Reserve

    4,000

    Proposed Dividend

    15,600

    Provision for Taxation

    12,800

    Net Profit before Taxation and Extraordinary

    36,000

    Items to be added:

    Depreciation on Land and Building

    20,000

    Depreciation on Plant

    10,000

    Goodwill written off

    5,200

    35,200

    Operating Profit before Working Capital changes

    71,200

    Add:

    Increase in Current Liabilities

    Bills Payable

    7,200

    Add:

    Decrease in Current Assets

    Inventories

    2,800

    10,000

    81,200

    Less:

    Increase in Current Assets

    Trade Receivables

    (13,200)

    Less:

    Decrease in Current Liabilities

    Outstanding Expenses

    (800)

    (14,000)

    Cash Generated from Operating Activities

    67,200

    Less:

    Income Tax paid

    (11,200)

    Net Cash from Operating Activities

    56,000

    B.

    Cash Flow from Investing Activities

    Purchases of Plant

    (50,400)

    Purchases of Investment

    (10,000)

    Net Cash used in Investing Activities

    (60,400)

    C.

    Cash Flow from Financing Activities

    Issue of Equity Shares

    40,000

    Dividend paid

    (11,200)

    Redemption of 10% Preference Shares

    (20,000)

    Net Cash from Financing Activities

    8,800

    D.

    Net Increase in Cash and Cash Equivalent

    4,400

    Add:

    Cash and Cash Equivalent in the beginning

    6,800

    E.

    Cash and Cash Equivalents at the end

    11,200

    Working Notes
    1.

    Plant Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    To Balance b/d

    36,000

    By Depreciation

    10,000

    To Bank A/c (Purchases- Balancing figure)

    50,400

    By Balance c/d

    76,400

    86,400

    86,400

    2.

    Net Profit before Tax

    3,600

    Profit and Loss Account

    12,800

    Less:

    Provision for Tax

    16,400

    Note: As per the solution, the Net Cash from Operating Activities, net Cash from Investing Activities and Net Cash from Financing Activities are Rs 56,000, Rs (60400) and Rs 8,800 respectively. However, as per the answer given in the book, the Net Cash from Operating Activities, net Cash from Investing Activities and Net Cash from Financing Activities are Rs 34,800, Rs (50,400) and Rs 20,000 respectively.


    Q22: From the following information, prepare cash flow statement:

     
    Particulars Note No. 31st March
    2014
    (Rs)
    31st March
    2013
    (Rs)
    I) Equity and Liabilities
    1. Shareholders’ Funds
    a) Share capital
    7,00,000 5,00,000
    b) Reserves and surplus
    4,70,000 2,50,000
    2. Non-current Liabilities
    (8% Debentures)
    4,00,000 6,00,000
    3. Current Liabilities
    a) Trade payables
    9,00,000 6,00,000
    Total 24,70,000 19,50,000
    II) Assets
    1. Non-current assets
    a) Fixed assets
    i) Tangible
    7,00,000 5,00,000
    ii) Intangible-Goodwill
    1,70,000 2,50,000
    2. Current assets
    a) Inventories
    6,00,000 5,00,000
    b) Trade Receivables
    6,00,000 4,00,000
    c) Cash and cash equivalents
    4,00,000 3,00,000
    Total 24,70,000 19,50,000

    Additional Information:
    Depreciation Charge on Plant amount to Rs. 80,000.
    Answer:

    Cash Flow Statement

    for the year ending March 31, 2014

    Particulars

    Details

    (Rs)

    Amount

    (Rs)

    A.

    Cash from Operating Activities

    Net Profit

    2,20,000

    Items to be Added:

    Interest on Debentures

    48,000

    Depreciation on Fixed Assets

    80,000

    Goodwill Written-off

    80,000

    2,08,000

    Operating Profit before Working Capital Adjustments

    4,28,000

    Add: Increase in Current Liabilities

    Creditors

    3,00,000

    Less: Increase in Current Assets

    Inventories

    (1,00,000)

    Trade Receivables

    (2,00,000)

    –

    Cash Generated from Operations

    4,28,000

    Less: Tax Paid

    –

    Net Cash From Operating Activities

    4,28,000

    B.

    Cash From Investing Activities

    Purchase of Fixed Assets (WN)

    (2,80,000)

    Net Cash From Investing Activities

    (2,80,000)

    C.

    Cash From Financing Activities

    Issue of Share Capital

    2,00,000

    Redemption of Debentures

    (2,00,000)

    Interest Paid on Debentures

    (48,000)

    (48,000)

    Net Cash From Financing Activities (C)

    (48,000)

    Net Increase in Cash (A + B + C)

    1,00,000

    Add: Opening Cash and Cash Equivalents

    3,00,000

    Closing Cash and Cash Equivalents

    4,00,000

    Working Note:

    Fixed Assets Account

    Dr.

    Cr.

    Particulars

    J.F.

    Amount

    (Rs)

    Particulars

    J.F.

    Amount

    (Rs)

    Balance b/d

    5,00,000

    Depreciation

    80,000

    Purchases (Balancing Figure)

    2,80,000

    Balance c/d

    7,00,000

    7,80,000

    7,80,000

     


    Q23: From the following Balance Sheet of Yogeta Ltd., prepare cash flow statement:

     
    Particulars Note No. 31st March
    2014
    (Rs)
    31st March
    2013
    (Rs)
    I) Equity and Liabilities
    1. Shareholders’ Funds
    a) Share capital
    1 4,00,000 2,00,000
    b) Reserves and surplus-Surplus
    2,00,000 1,00,000
    2. Non-current Liabilities
    a) Long-term borrowings
    2 1,50,000 2,20,000
    3. Current Liabilities
    a) Short-term borrowings
    1,00,000 –
    (Bank overdraft)
    b) Trade payables
    70,000 50,000
    c) Short-term provision
    50,000 30,000
    (Provision for taxation)
    Total 9,70,000 6,00,000
    II) Assets
    1. Non-current assets
    a) Fixed assets
    i) Tangible
    7,00,000 4,00,000
    2. Current assets
    a) Inventories
    1,70,000 1,00,000
    b) Trade Receivables
    1,00,000 50,000
    c) Cash and cash equivalents
    – 50,000
    Total 9,70,000 6,00,000

    Notes to Accounts

    Particulars 31st March
    2014
    (Rs)
    31st March
    2013
    (Rs)
    1. Share capital
    a) Equity share capital
    3,00,000 2,00,000
    b) Preference share capital
    1,00,000 –
    4,00,000 2,00,000
    2. Long term borrowings
    Long-term loan
    – 2,00,000
    Long-term Rahul
    1,50,000 20,000
    1,50,000 2,20,000

    Additional Information:
    Net Profit for the year after charging Rs. 50,000 as Depreciation was Rs. 1,50,000. Dividend paid on Share was Rs. 50,000, Tax Provision created during the year amounted to Rs. 60,000.
    Answer:

    Cash Flow Statement of Yogeta Ltd.

    Particulars

    Amount

    Rs

    Amount

    Rs

    A.

    Cash Flow from Operating Activities

    Profit as per Balance Sheet (2,00,000 –1,00,000)

    1,00,000

    Proposed Dividend

    50,000

    Provision for Taxation

    60,000

    Net Profit before Taxation and Extraordinary items

    2,10,000

    Items to be added:

    Depreciation

    50,000

    50,000

    Operating Profit before Working Capital changes

    2,60,000

    Add: Increase in Current liabilities

    Trade Payable

    20,000

    20,000

    2,80,000

    Less: Increase in Current Assets

    Inventories

    (70,000)

    Trade Receivable

    (50,000)

    (1,20,000)

    Cash Generated from Operating Activities

    1,60,000

    Less: Income Tax paid

    (40,000)

    Net Cash from Operations

    1,20,000

    B.

    Cash Flow from Investing Activities

    Purchases of Fixed Assets

    (3,50,000)

    Net Cash used in Investing Activities

    (3,50,000)

    C.

    Cash Flow from Financing Activities

    Issue of Equity Shares

    1,00,000

    Issue of Preference Shares

    1,00,000

    Loan from Rahul

    1,30,000

    Less: Repayment of Loan

    (2,00,000)

    Dividend Paid

    (50,000)

    Net Cash from Financing Activities

    80,000

    D.

    Net decrease in Cash and Cash Equivalent (A+B+C)

    (1,50,000)

    Add: Cash and Cash Equivalents in the beginning

    50,000

    E.

    Cash and Cash Equivalents at the end (Bank Overdraft)

    (1,00,000)

    Working Notes:

    1.

    Provision for Taxation Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    Bank (Balancing figure)

    40,000

    Balance b/d

    30,000

    Balance c/d

    50,000

    Profit and Loss

    60,000

    90,000

    90,000

    2.

    Fixed Assets Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    Balance b/d

    4,00,000

    Depreciation

    50,000

    Bank

    3,50,000

    Balance c/d

    7,00,000

    7,50,000

    7,50,000

     


    Q24: Following is the Financial Statement of Garima Ltd., prepare cash flow statement.

     
    Particulars Note No. 31st March
    2015
    (Rs)
    31st March
    2014
    (Rs)
    I) Equity and Liabilities
    1. Shareholders’ Funds
    a) Share capital
    1 4,40,000 2,80,000
    b) Reserve and surplus-Surplus
    2 40,000 28,000
    2. Current Liabilities
    a) Trade payables
    1,56,000 56,000
    c) Short-term provisions
    12,000 4,000
    (Provision for taxation)
    Total 6,48,000 3,68,000
    II) Assets
    1. Non-current assets
    a) Fixed assets
    i) Tangible
    3,64,000 2,00,000
    2. Current assets
    a) Inventories
    1,60,000 60,000
    b) Trade receivables
    80,000 20,000
    c) Cash and cash equivalents
    28,000 80,000
    d) Other current assets
    16,000 8,000
    Total 6,48,000 3,68,000

    Notes to Accounts

    Particulars 31st March
    2015
    (Rs)
    31st March
    2014
    (Rs)
    1. Share capital
    a) Equity share capital
    3,00,000 2,00,000
    b) Preference share capital
    1,40,000 80,000
    4,40,000 2,80,000
    2. Reserve and surplus
    Surplus in statement of profit and loss at the beginning of the year
    28,000
    Add: Profit of the year
    16,000
    Less: Dividend
    4,000
    Profit at the end of the year 40,000

    Additional Information:

    1. Interest paid on Debenture Rs 600
    2. Dividend paid during the year Rs 4,000
    3. Depreciation charged during the year Rs 32,000

    Answer:

    Cash Flow Statement (Indirect Method)

    Particulars

    Amount

    Rs

    Amount

    Rs

    A.

    Cash Flow from Operating Activities

    Profit as per Balance Sheet (40,000 – 28,000)

    12,000

    Proposed Dividend

    4,000

    Provision for Taxation

    12,000

    Net Profit before Taxation and Extraordinary items

    28,000

    Items to be added:

    Interest paid on Debentures 600

    Depreciation

    32,000

    32,600

    Operating Profit before Working Capital changes

    60,600

    Add: Increase in Current liabilities

    Trade Payables

    1,00,000

    Less: Increase in Current Assets

    Other Current Assets

    (8,000)

    Inventories

    (1,00,000)

    Trade Receivables

    (60,000)

    (68,000)

    Cash generated from Operating Activities

    (7,400)

    Less: Income Tax paid

    (4,000)

    Net Cash used in Operating Activities

    (11,400)

    B.

    Cash Flow from Investing Activities

    Purchase of Fixed Assets

    (1,96,000)

    Net Cash used in Investing Activities

    (1,96,000)

    C.

    Cash Flow from Investing Activities

    Issue of Equity Shares

    1,00,000

    Issue of Preference Shares

    60,000

    Less: Interest Paid on Debentures (600)

    Less: Dividend Paid

    (4,000)

    Net Cash from Financing Activities

    1,55,400

    D.

    Net decrease in cash and cash equivalent (A+B+C)

    (52,000)

    Add: Cash and Cash Equivalents in the beginning

    80,000

    E.

    Cash and Cash Equivalents at the end

    28,000

    Working Notes:

     

    Plant and Machinery Account

    Dr.

    Cr.

    Date

    Particulars

    J.F.

    Amount

    Rs

    Date

    Particulars

    J.F.

    Amount

    Rs

    Balance b/d

    2,00,000

    Depreciation

    32,000

    Bank (Purchases- Balancing fig.)

    1,96,000

    Balance c/d

    3,64,000

    3,96,000

    3,96,000

    Note: As per our solution Cash flow from Operating, Investing and Financing Activities is (Rs 11,400), (Rs 1,96,000) and Rs 1,55,400 respectively. But as per the book it is Rs (12,000), (Rs 1,96,000) and Rs 1,56,000.


    Q25: From the following Balance Sheet of Computer India Ltd., prepare cash flow statement.
    (Rs in ‘000)

    Particulars Note No. 31st March
    2015
    (Rs)
    31st March
    2014
    (Rs)
    I) Equity and Liabilities
    1. Shareholders’ Funds
    a) Share capital
    50,000 40,000
    b) Reserves and surplus-Surplus
    1 3,700 3,000
    2. Non-Current Liabilities
    10% Debentures
    6,500 6,000
    3. Current Liabilities
    a) Short-term borrowings
    2 6,800 12,500
    b) Trade payables
    11,000 12,000
    c) Short-term provisions
    3 10,000 8,000
    Total 88,000 81,500
    II) Assets
    1. Non-current assets
    a) Fixed assets
    4 25,000 30,000
    2. Current assets
    a) Inventories
    35,000 30,000
    b) Trade receivables
    24,000 20,000
    c) Cash and cash equivalents-cash
    3,500 1,200
    d) Other current assets-prepaid exp.
    500 300
    Total 88,000 81,500

    Notes to Accounts

    Particulars 31st March
    2015 (Rs)
    31st March
    2014 (Rs)
    1. Reserve and surplus
    (i) Balance in statement of profit and loss 1,200 1,000
    (ii) General reserve 2,500 2,000
    3,700 3,000
    2. Short-term borrowings
    Bank Overdraft
    6,800 12,500
    3. Short-term provisions
    (i) Provision for taxation
    4,200 3,000
    (ii) Proposed dividend
    5,800 5,000
    10,000 8,000
    4. Fixed Assets:
    Fixed Assets 40,000 41,000
    Less: Accumulated Depreciation (15,000) (11,000)
    25,000 30,000

    Additional Information:
    Interest paid on Debenture Rs. 600
    Answer:

    Cash Flow Statement of Computer India Ltd.

    (00,000)

    Particulars

    Amount

    Rs

    Amount

    Rs

    A.

    Cash Flow from Operating Activities

    Profit as per Balance Sheet (1,200 – 1,000)

    200

    Proposed Dividend

    5,800

    General Reserve

    500

    Provision for Taxation

    4,200

    Net Profit before Tax and Extraordinary items

    10,700

    Items to be added

    Provision for Depreciation

    4,000

    Interest paid on Debentures

    600

    4,600

    Operating Profit before Working Capital changes

    15,300

    Adjustments

    Less:

    Increase in Current Assets

    Trade Receivables

    (4,000)

    Inventories

    (5,000)

    Prepaid Expenses

    (200)

    (9,200)

    6,100

    Less:

    Decrease in Current Liabilities

    Trade Creditors

    (1,000)

    (1,000)

    Cash generated from Operating Activities

    5,100

    Less:

    Income Tax Paid

    (3,000)

    Net Cash from Operation

    2,100

    B.

    Cash Flow from Investing Activities

    Sale of Fixed Assets

    1,000

    Net Cash from Investing Activities

    1,000

    C.

    Cash Flow from Financing Activities

    Issue of Equity Shares

    10,000

    Issue of 10% Debentures

    500

    Less:

    Dividend paid

    (5,000)

    Less:

    Interest paid

    (600)

    Net Cash from Financing Activities

    4,900

    D.

    Net Increase in Cash and Cash Equivalent (A+B+C)

    8,000

    Add:

    Cash and Cash Equivalent in the beginning

    Cash

    1,200

    Bank overdraft

    (12,500)

    (11,300)

    E.

    Cash and Cash Equivalents at the end

    Cash

    3,500

    Bank overdraft

    (6,800)

    (3,300)

     


     

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    Previous ArticleNCERT Solutions for Class 12 Accountancy – Company Accounts and Analysis of Financial Statements Chapter 5 – Accounting Ratios
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    Class 12 Accountancy Chapter Solutions

    Company Accounts and Analysis of Financial Statements

      • Chapter 1 - Accounting for Share Capital
      • Chapter 2 - Issue and Redemption of Debentures
      • Chapter 3 - Financial Statements of a Company
      • Chapter 4 - Analysis of Financial Statements
      • Chapter 5 - Accounting Ratios
      • Chapter 6 - Cash Flow Statement

    Partnership Accounts Solutions

      • Chapter 1 - Accounting for Partnership : Basic Concepts
      • Chapter 2 - Reconstitution of a Partnership Firm - Admission of a Partner
      • Chapter 3 - Reconstitution of a Partnership Firm - Retirement/Death of a partner
      • Chapter 4 - Dissolution of Partnership Firm
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