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Cash
Cash
Cash
Cash Flow Statement is a statement that shows the flow of Cash and Cash Equivalents during the period
under report. Cash Flows are inflows (i.e., receipts) and outflows (i.e., payments) of Cash and Cash
Equivalents. Transactions that increase Cash and Cash Equivalents are inflows of Cash and Cash
Equivalents and transactions that decrease Cash and Cash Equivalents are outflows of Cash and Cash
Equivalents. Cash and Cash Equivalents include Cash, Bank Balance, Marketable Securities, etc. Unless
specified otherwise, Current Investments are considered as Marketable Securities. Hence, are included
in Cash and Cash Equivalents.
Cash Flow Statement is prepared according to the Accounting Standard-3 (Revised). The accounting
standard prescribes that Cash Flow Statement be prepared showing cash flow under three heads,
namely:
OBJECTIVES OF CASH FLOW STATEMENT :- The objectives of Cash Flow Statement are:
• To determine the sources (receipts) of Cash and Cash Equivalents under operating, investing and
financing activities of the enterprise.
• To determine applications (payments) of Cash and Cash Equivalents under operating, investing and
financing activities of the enterprise.
• To determine net change in Cash and Cash Equivalents being the difference between sources
(receipts) and applications (payments) under operating, investing and financing activities between the
dates of two Balance Sheets.
(i) Short-term Planning: Cash Flow Statement gives information about sources and applications
of Cash and Cash Equivalents for a specific period. It helps in planning investments and
assessing the financial requirements of the enterprise.
(ii) Cash Flow Helps in Assessing Liquidity and Solvency: Solvency is the ability of the
enterprise to meet its liabilities on time. Cash Flow Statement helps to assess liquidity.
(iii) Efficient Cash Management: Cash Flow Statement gives information relating to surplus or
deficit of cash. An enterprise, therefore, can decide about the Short-term Investments of the
surplus and can arrange the Short-term Credit in case of deficit.
(iv) Comparative Study: A comparison of the actual cash flows with the budgeted cash flows of
the year shows the extent to which Cash and Cash Equivalents were generated and applied
as per the plan.
(v) Reasons for Cash Position: Cash Flow Statement shows the reasons for lower and higher
cash balances with the enterprise. Sometimes, an enterprise has lower cash balance in spite
of higher profits or has higher cash balance in spite of lower profits. Reasons for such
situations can be analysed with the help of Cash Flow Statement.
(vi) Evaluate Management Decisions: Cash Flow Statement, by providing information relating to
company's investing and financing activities, gives the investors and creditors information
about cash flow which helps them to evaluate management decisions.
(vii) Dividend Decision: Dividend payable is deposited in a separate Bank Account upon it being
declared (i.e., interim dividend) or approved (i.e., final dividend). Cash Flow Statement helps
in deciding how much dividend should be paid.
LIMITATIONS OF CASH FLOW STATEMENT :-The limitations of Cash Flow Statement are:
(1) Non-cash Transactions are not Shown: Cash Flow Statement shows only inflows and outflows of
cash. It does not show non-cash transactions like the purchase of building by issue of shares or
debentures to the vendors or issue of bonus shares.
(2) Not a Substitute for an Income Statement: Income Statement shows net income of the
enterprise based on accrual basis of accounting whereas Cash Flow Statement shows only cash
inflows or outflows which does not represent net profit earned or loss incurred by the
enterprise.
(3) Not a Substitute for Balance Sheet: It is not a substitute for Balance Sheet (Position Statement)
because it does not show the financial position (i.e., Equity, Liabilities and Assets).
(4) Historical in Nature: It rearranges available information in the Income statement (Statement of
Profit and Loss) and the Balance Sheet. Thus, it is historical in nature.
(5) Assessment of Liquidity: Liquidity of the enterprise cannot be determined from Cash Flow
Statement alone because it depends on other factors also like current assets and current
liabilities. Cash and Cash Equivalents is one of the components of current assets.
(vi) Accuracy of cash Flow Statement: It is prepared from the financial statements. If financial
statements are prepared incorrectly, Cash Flow Statement will also be incorrect.
Meaning of cash :- Cash comprises of Cash on Hand and demand deposits with banks.
Meaning of cash equivalents:Cash Equivalents are short-term, highly liquid investments that are readily
convertible into the known amount of cash and which are subject to an insignificant change in value. An
investment normally qualifies as cash equivalent only when it has a short maturity of say, three months
or less from the date of acquisition
Note:- Current Investments, unless specified otherwise, are taken as Marketable Securities and
included in Cash and Cash Equivalents.
Examples of Cash Equivalents are Current Investments, Treasury Bills, Commercial Papers and these
have insignificant risk of change in its value, etc.
(i) Operating Activities :- Operating Activities are the principal revenue producing activities of
the enterprise and other activities that are not Investing or Financing Activities. Cash Flow
from operating Activities being principal revenue producing activity of enterprise, generally
results from the business transactions and events that determine net profit or loss.Examples of
Cash Flow from Operating Activities are:
(iii) Financing Activities :- Financing Activities are the activities which result in change in size and
composition of owner's capital (including Preference Share Capital in the case of a company) and
borrowings of the enterprise from other sources. Thus, increase in share capital (both equity and
preference), redemption of preference shares, issue of debentures, increase in borrowings (short-term
and long-term), repayment of borrowings (short-term and long-term) and redemption of debentures,
etc., are shown under Financing Activity. Examples of Cash Flow from Financing Activities are:
Question 1.From the following details relating to the Accounts of Grow More Ltd. prepare Cash Flow
Statement:
31.3.2002 31.3.2001
(Rs.) (Rs.)
Liabilities:
Share Capital 10,00,000 9,00,000
Reserve 2,00,000 1,50,000
Profit and Loss Account 1,00,000 60,000
Debentures 2,00,000
Provision for taxation 1,00,000 70,000
Sundry Creditors 9,00,000 8,20,000
25,00,000 20,00,000
Assets:
Plant and Machinery 7,00,000 5,00,000
Land/Building 6,00,000 4,00,000
Investments 1,00,000
Sundry Debtors 5,00,000 7,00,000
Stock 4,00,000 2,00,000
Cash on hand/bank 2,00,000 2,00,000
25,00,000 20,00,000
Adjustment:- Dividend proposed during last year and current year Rs 1,00,000 and Rs 1,20,000
respectively.
Question 2. Identify which of the following transactions are classified or shown as Operating, investing
or financing Activity:
(i) Cash received against sale of goods. (ii) Cash paid for purchases of goods.
Solution: Payments of Employees' Salaries, bonus, gratuity, etc., are always shown as Operating
Activity.
Question4. Identify out of the following transactions that are classified or shown as Investing Activity:
Question5. Identify out of the following transactions that are shown as Financing Activity:
Question 6. State a transaction that is always classified as a Financing Activity along with the reason for
such classification.
Question7. Give a transaction, a part of which is shown as an Investing Activity and another part as a
Financing Activity.
Solution: Payment of instalments under Hire-purchase System. The instalment has two components,
Principal and interest. Principal is shown as an Investing Activity and interest as a Financing Activity.
Transactions that are movement in between the items of Cash and Cash Equivalents are not regarded as
Cash Flow because the balance (Opening and Closing) of Cash and Cash Equivalents is the net result of
Cash Flow under Operating, Investing and Financing Activities. For example, cash deposited into bank is
not Cash Flow because Cash-in-Hand is reduced on deposit into bank but bank balance is increased.
Both Cash and Bank are items of Cash and Cash Equivalents. Other examples are cash withdrawn from
bank and purchase and sale of marketable securities.
Non-cash Transactions :- Non-cash Transactions are those transactions in which flow (inflow or
outflow) of Cash and Cash Equivalent does not take place. For example, Depreciation and Amortization
Expenses, Issue of Bonus Shares and Issue of Equity Shares or Debentures for consideration other than
cash (say, for purchase of assets), etc.
Non-cash transactions are not considered while preparing Cash Flow Statement.
Question 8. Identify the following transactions belonging to (1) Operating Activities, (2) Investing
Activities, (3) Financing Activities, and (4) Cash and Cash equivalent:
Question 9. Identify which of the following transactions are (i) Operating Activities (ii) Investing
Activities, (iii) Financing Activities, and (iv) Cash and Cash Equivalents:
Question 10. Identify which of the following transactions are (i) Operating Activities, (ii) Investing
Activities (iii) Financing Activities, and (iv) Cash and Cash Equivalents:
1. Sale of Investments;
7. Marketable Securities;
Question 11. Classify the following transactions as Operating Activities for (i) Financial Enterprise, and
(ii) Non-financial Enterprise:
(a) Purchase of securities of a company;
(b) Brokerage paid for the above purchases;
(c) Sale of securities of a company;
(d) Dividend and interest received on securities;
(e) Dividend paid to shareholders;
(f) Interest paid on borrowings;
(g) Loans and advances made; and
(h) Receipt of loans and advances made.
Give reasons for your answer.
Solution: (i) Financial Enterprise: All the transactions except (e), i.e., Dividend paid to shareholders shall be
classified or shown as Operating Activities. It is so because Purchase and Sale of Securities and also Borrowings and
Advancing Loans are the principal revenue producing activities of a financial enterprise.
Dividend paid to shareholders shall be classified as Financing Activity because it is related to the transactions that
change the size and composition of owners' capital.
(ii) Non financial Enterprise: All the transactions except (e) and (f) (i.e., Dividend paid to shareholders and Interest
paid on borrowings respectively) shall be classified as Investing Activities because these are not the principal
revenue producing activities of the enterprise.
Transactions (e) and (f) shall be classified as Financing Activities because these are related to activities that change
the size and composition of the owners' capital and borrowings.
Question 12. State which of the following would result in inflow/outflow/no flow of Cash and Cash
Equivalents:
Cash Equivalents.
(vi) No Flow It is a movement between two components of Cash and
Cash Equivalents.
(vii) No Flow Cash is not affected. It is capitalization of profits.
(viii) No Flow Cash which includes marketable securities also is not
affected.
(ix) No Flow Cash is not affected because final dividend declared will
be paid in the next year, if approved by shareholders.
(x) No Flow Cash is not affected.
(xi) Outflow Interim dividend declared is paid within 7 days of
declaration.
(xii) No Flow Current Investments are part of Cash and Cash
Equivalents.
(xiii) Inflow Short-term Borrowing has increased.
NOTE:- Extraordinary Items: Extraordinary items are incomes and expenses that arise from events or
transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not
expected to recur frequently or regularly. Examples of Extraordinary items are:
a. Operating Activities: Compensation paid to employees under Voluntary Retirement Scheme.
b. Investing Activities: Claim received against damage of fixed assets say because of earthquake.
c. Financing Activities: Payment for buy-back of Shares
ACCOUNTING OF PROPOSED DIVIDUND:- AS 4, Contingencies and Events Occurring After the Balance Sheet
Date prescribes that Proposed Dividend should by accounted as liability after it has been declared, i.e., approved
by the shareholders. However, it should he disclosed in the Notes to Accounts ants attached to the financial
statements.
Therefore, Proposed Dividend is not shown as Short-term Provision in the Balance Sheet but is disclosed in the
Notes to Accounts. After it is approved by the shareholders in their meeting which is held after closure of
accounting year, i.e., in the next year, it is accounted as a liability and is paid.
(I) Proposed Dividend for previous year is shown as outflow of cash assuming that the shareholders have
approved the proposed dividend as was recommended.
(II) No effect is given to Proposed Dividend for the current year as it is not provided. When such dividend is
declared (approved) in the AGM, entry is passed debiting 'Surplus, i.e., Balance in Statement of Profit and
Loss Account' and Crediting 'Dividend Payable Account' and thereafter such declared dividend is paid. Net
Dividend paid (i.e., Proposed and Approved Dividend less Dividend still payable) is shown as Cash Used in
Financing Activity.
Note: Unless otherwise stated, it is presumed that the dividend proposed for the previous year has been declared
at the AGM in the Current Year at the proposed amount and has also been paid during the Current Year.
Question13. Following is the extract from the Balance Sheets of KBC Ltd.:
Additional Information:
(a) Proposed equity dividends for the years ended 31st March, 2017 and 2018 were Rs 1,50,000 and Rs 1,00,000
respectively.
(b) An Interim Dividend of Rs 50,000 on Equity Shares was paid on 31st December, 2017.
Show Net Profit before Tax and Extraordinary Items.
Question15. From the following information relating to year ended 31st March, 2019 calculate Net Profit before
Tax and Extraordinary Activities:
Particulars Rs
surplus, i.e., Balance in Statement of Profit and Loss (Opening) 2,00,000
Surplus, i.e., Balance in Statement of Profit and Loss (Closing) 6,72,000
Transfer to Debentures Redemption Reserve 2,00,000
Proposed Dividend for the Previous Year ended 31st March, 2018 1,80,000
Interim Dividend paid during the year 1,44,000
Provision for Tax made during the Current Year 2,00,000
Income Tax Paid 2,16,000
Question16. From the following information for the year ended 31st March, 2017, calculate Net Profit before Tax
and Extraordinary Activities:
Particulars Rs
Surplus, i.e., Balance in Statement of Profit and Loss (Opening) (2,00,000)
Surplus, i.e., Balance in Statement of Profit and Loss (Closing) 5,40,000
Proposed Dividend for the year ended 31st March, 2017 3,15,000
Proposed Dividend for the year ended 31st March, 2016 2,10,000
Transfer to Workmen Compensation Reserve 1,50,000
Provision for Tax made during the Current Year 2,30,000
Question17.Prepare cash flow statement from the following Balance Sheet of Mamma Ltd. as at 31.3.2019:
1. Shareholder’s Funds
(a) Shares capital 1 8,00,000 8,00,000
(b) Reserves and surplus 2 6,95,000 5,20,000
2. Non-Current Liabilities
Long-term Borrowing 5,00,000 5,00,000
3. Current Liabilities
23,05,000 20,45,000
1. ASSETS
1. Non-current Assets
(a) Fixed Assets 18,40,000 15,55,000
(b) Non-current investments 3,00,000 3,00,000
2 Current Assets 1,65,000 1,90,000
Total
23,05,000 20,45,000
Notes to Accounts
Note; proposed Dividend for the years ended 31st March, 2019 and 2018 are Rs.1,60,000 and Rs.80,000
respectively.
Question 18. . Calculate Net Profit before Tax and Extraordinary Items from the following Balance Sheet
of COC Ltd.
Question19. . Calculate Net Profit before Tax and Extraordinary Items from the following Balance Sheet
of COC Ltd.
Question20.from the following information, calculate operating profit before working capital changes:
Net profit before tax and extraordinary items Rs 2,23,500
Depreciation Rs 42,000
Interest on borrowings Rs 8,400
Goodwill amortised Rs 9,300
Loss on sale of machinery Rs 9,000
Premium on redemption of debentures Rs 3,000
Interest and dividend received on investments Rs 13,800
Profit on sale of investments Rs 6000
Question 21. Calculate Cash Flow from Operating Activities from the following details:
Question22. Compute Cash Flow from Operating Activities from the following information:
Particulars Rs
Net Loss (As per Working Note 1) (10,000)
Add: Decrease in Current Assets:
Trade Receivables 12,000
2,000
Less: Increase in Current Assets and Decrease in Current Liabilities:
Prepaid Insurance 4,000
Outstanding Rent 18,000
Trade Payables 12,000 (34,000)
CASH USED IN OPERATING ACTIVITIES
(32,000)
Question 23. Compute Cash Flow from Operating Activities from the following Information:
Particulars Rs
Net Profit after Provision for Tax and Proposed Dividend 1,10,000
Provision for Tax 50,000
Proposed Dividend (Last Year) approved by shareholders in AGM 50,000
Depreciation 20,000
Loss on Sale of Plant 10,000
Goodwill Amortised 40,000
Gain on Sale of Land 40,000
Income Tax Paid 50,000
Question24. Calculate Cash Flow from Operating Activities from the following:
(i) Profit for the year before tax and after considering the following items is Rs 2,50,000.
Particulars Rs
Depreciation on Fixed Assets 1,00,000
Amortization of Goodwill 50,000
Transfer General Reserve 70,000
Gain (Profit) on Sale of Land 30,000
Question25. Sunshine Ltd. reported Net Profit after Tax of Rs 3,40,000 for the year ended 31st March,
2018. The extracts from Balance Sheets for 31st March, 2018 and 2017 are:
Question26. X Ltd. earned profit of Rs 5,00,000 after charging Depreciation of Rs 1,00,000 on assets and
a transfer to General Reserve of Rs 1,50,000. Goodwill amortised was Rs 35,000 and gain on sale of
Machinery was Rs 15,000.
Additional Information: At the end of the year, Debtors showed an increase of Rs 30,000; creditors an
increase of Rs 50,000; Prepaid Expenses an increase of Rs 1,000; Bills Receivable a decrease of Rs
15,000; Bills Payable a decrease of Rs 20,000 and outstanding expenses a decrease of Rs 10,000.
Determine the Cash Flow from Operating Activities.
Particulars (Rs)
Question27. The following is the Statement of Profit and Loss of Yamuna Ltd.:
STATEMENT OF PROFIT AND LOSS OF YAMUNA LTD. for the year ended 31st March, 2019
Particulars (Rs)
I.Revenue from Operations 10,00,000
II.Expenses:
(a) Cost of Materials Consumed 50,000
(b) Purchase of Stock-in-Trade 5,00,000
(c) Other Expenses 3,00,000
Total Expenses 8,50,000
III.Profit before Tax (I-II) 1,50,000
Additional Information:
1. Trade Receivables decrease by 30,000 during the year.
2. Prepaid expenses increase by 5,000 during the year.
3. Trade Payables increase by 15,000 during the year.
4. Outstanding Expenses increased by 3,000 during the year.
5. Other expenses included depreciation of 25,000.
Compute Cash Flow from Operating Activities for the year ended 31st March, 2019. (NCERT, Modified)
Question 28. From the following information. Calculate Cash Flow from Operating Activities:
Statement of Profit and loss for the year ended 31st march 2019
Particular Note No Rs
l Revenue from Operation (Net Sales) 19,20,000
ll. Other Income 1 28,800
lll. Total Revenue (1+II) 19,48,000
lV. Expenses:
(a) Purchase of Stock-in-Trade 11,90,400
(b) Change in Inventories of Stock-in-Trade 49,600
(c) Depreciation and Amortization Expenses 48,000
(d) Other Expenses 2 4,75,200
Total Expenses 17,63,200
V. Profit before Tax (lll-IV) 1,85,600
VI. Less: Tax 57,600
VII. Profit after Tax 1,28,000
Notes to Accounts
Particular Rs.
1. Other Income
(l) Gain on sale of furniture 24,000
(ll) Interest 4,800
28,800
2. Other expenses
(l) Selling and Distribution Expenses 1,04,000
(ll) Office Expenses 2,40,000
(lll) Loss on Sale of Machinery 1,31,200
4,75,200
Additional Information:
Question29. From the following particulars calculate Cash Flow Operating Activities
Question30.Calculate Cash Flow from Operating Activities from the following information:
An item of plant costing Rs 20,000 having book value of Rs 14,000 was sold for Rs 18,000 during the year.
Question31. From the following information, calculate Cash Flow from Operating Activities:
STATEMENT OF PROFIT AND LOSS for the year ended 31st March, 2018
Particulars Rs
1. Change in Inventories of Stock-In-Trade
Opening Inventories 1,10,000
Less: Closing Inventories 1 35,000
(25000)
Additional Information:
Question 32. X Ltd. has Machinery written down value of which on 1st April, 2018 was 8,60,000 and on 31st
March, 2019 was 9,50,000. Depreciation for the year was 40,000, In the beginning of the year, a part of machinery
was sold for Rs 25,000 which had a written down value of 20,000. Calculate Cash Flow from Investing Activities .
Question33. From the following information, calculate Cash Flow from Investing Activities:
Additional Information
1. During the year, a machine costing Rs 40,000 with its accumulated depreciation of Rs 24,000 was sold for
20,000.
2. Patents written off were Rs 40,000 and some patents were sold at a profit of Rs 20,000.
Question34. From the following information, determine Cash Flow from Investing Activities of X Ltd.:
I. Half of the investments held in the beginning of the year were sold at 10% gain (profit).
II. Depreciation on Fixed Assets was Rs 1,00,000 for the year.
III. Interest received on investments Rs 35,000.
IV. Dividend received on investments Rs 25,000.
Question 35. From the following particulars, determine Cash Flow from Investing Activities:
Goodwill 2,00,000 …
Patents … 1,00,000
A. Interest received on Debentures held as an investment Rs 16,000.
B. Dividend received on Shares held as an investment Rs 20,000.
C.A plot of land was purchased out of surplus funds for investment purposes and was let out for commercial use.
Rent received was Rs 80,000.
Question 36. A company had the following balances: -
Particulars Rs
Investments in the beginning of the period 34,000
Investments at the end of the period 28,000
During the year, the company sold 40% of its investments held in the beginning of period at a profit of
Rs 8,400 Determine Cash Flow from Investing Activities .
Question 37. From the following information, determine Cash Flow from Investing Activities:
2. during the year, a part of furniture costing Rs 24,000( book value Rs 13,000) sold for Rs 6,000.
3. total depreciation charged on plant and machinery during the year Rs 50,000.
4. a part of machine costing Rs 70,000( book value Rs 39,000) sold at loss of Rs 9,000.
Question 38. From the following Balance Sheet G. Ltd as at 31st march 2019 and the additional information,
prepare Cash Flow statement:
Notes to Accounts
3. Trade Receivables
Sundry Debtors 1,20,000 1,10,000
Bills Receivable 80,000 70,000
2,00,000 1,80,000
Additional Information: During the year, the company sold machinery at book value for 2,00,000.
Question39. From the following information, determine Cash Flow from Financing Activities:
Question40. XYZ Ltd. provides the following information. Determine Cash Flow from Financing Activities:
Question41. Following is the extract from Balance Sheets as at 31st March, 2019 of a company.
Additional Information:
1. Interim dividend on Equity Shares at the end of current year was paid @ 15%.
4. Fresh shares and debentures were issued on the last date of current year. Determine Cash Flow from
Financing Activities.
Question42. From the following information, determine Cash Flow from Investing Activities and
Financing Activities:
Additional information: During the year, furniture costing Rs 4,000 was sold at a gain (profit) of Rs
3,000. Depreciation on furniture charged during the year amounted to Rs 5,000.
Particulars Rs
Proceeds from Issue of Share Capital (Given) (Rs 1,40,000 -Rs 1,00,000) 40,000
Repayment of Bank Loan (Given) (Rs15,000 -Rs 25,000) (10,000)
Cash Flow from Financing Activities 30,000
CASH FLOW FROM INVESTING ACTIVITIES
Particulars Rs
Proceeds from Sale of Furniture (WN 3) 5,000
Payment for Purchase of Furniture (WN 1) 12,000
Cash Used in Investing Activities (WN 4) 7,000
Working Note: FURNITURE ACCOUNT
Particulars Rs Particulars Rs
To Balance b/d 20,000 By Bank A/c (WN 3) 5,000
To Gain (Profit) on Sale of 3,000 By Accumulated Depreciation A/c
Furniture A/c (Statement of Profit By Balance c/d 2,000
and Loss) 28,000
To Bank A/c (Balancing Figure)
(Furniture Purchased) 12,000
35,000 35,000
Particulars Rs Particulars Rs
To Furniture A/c (Balancing 2,000 By Balance b/d 6,000
Figure) By Depreciation A/c 5,000
(Accumulated depreciation
on furniture sold)
To Balance c/d 9,000
11,000 11,000
NOTE:- Share Issue Expenses and Underwriting Commission Paid:Share Issue Expenses: Share Issue
Expenses are shown as outflow under Financing Activity, it being related to Share Capital.
Question 43. From the following information, calculate Cash Flow from Financing Activities.
Particulars Rs
Opening Cash Balance 10,000
Closing Cash Balance 12,000
Decrease in Trade Receivables 5,000
Increase in Trade Payables 7,000
Sale of Fixed Assets 20,000
Redemption of Debentures 50,000
Net Profit for the year before Tax 20,000
Solution: CASH FLOW STATEMENT for the year ended 31st March, 2018
Particulars Rs
(A) Cash Flow from Operating Activities
Net Profit for the year before Tax 20,000
Add: Increase in Trade Payables 7,000
Decrease in Trade Receivables 5,000 12,000
Cash Flow from Operating Activities 32,000
(B) Cash Flow from Investing Activities
Proceeds from Sale of Fixed Assets 20,000
Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
Redemption of Debentures (50,000)
(D) Net Increase in Cash and Cash Equivalents (A + B + C) 2,000
Add: Cash and Cash Equivalents in the beginning of the year 10,000
(E) Cash and Cash Equivalents at the end of the year 12,000
Question 45. Following is the Balance Sheet of X Ltd. as at 31st March, 2018:
Question 46. Prepare Cash Flow Statement from the Balance Sheet of Nirmal Baba Ltd. as at 31.3.2018:
Note to Accounts
Question 47. Balance Sheet of ABC Ltd. as at 31st March, 2018 is as follows:
Particulars Note No 31st March, 31st March,
2018 2017
EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 2,00,000 2,00,000
(b) Reserves and Surplus:
Surplus, i.e., Balance in Statement of Profit and Loss 98,000 96,000
2. Non-Current Liabilities
Long-term Borrowings 1 90,000 60,000
3. Current Liabilities
Trade Payables 82,000 72,000
Total 4,70,000 4,28,000
II ASSETS
1. Non-Current Assets
Fixed Assets (Tangible) 2 3,42,000 3,00,000
2. Current Assets
(a) Inventories 44,000 50,000
(b) Trade Receivables 76,800 70,000
(c) Cash and Cash Equivalents 7,200 8,000
Total 4,70,000 4,28,000
Notes to Accounts:
Question 48. From the following information, calculate Cash Flow from Operating Activities and Investing Activities:
Question 49. You are required to prepare a Cash Flow Statement (as per AS-3) for the year ended 31st March,
2019 from the following Balance Sheet as at 31st March, 2019: ABC Ltd.
Note to Accounts
Note: Dividend proposed for the year 2017-18 and 2018-19 are 60,000 and 80,000 respectively.
Question 50. Following is the Balance Sheet of Wisben Ltd. As at 31st March 2012
Additional Information: During the year a piece of machinery of the book value of 80,000 was sold for
65,000. Depreciation provided on tangible assets during the year amounted to Rs 2,00,000.
Question51. Following is the Balance Sheet of K.K. Ltd. as at 31st March, 2015:
3. Current Liabilities
(a) Short-term Borrowings 3 3,00,000 1,00,000
(b) Short-term Provisions 4 1,40,000 1,80,000
Total 27,40,000 19,80,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets:
(I) Tangible Assets 5 20,06,000 14,40,000
(II) Intangible Assets 6 40,000 60,000
(b) Non-current Investments 2,00,000 1,50,000
2. Current Assets
(a) Current investments 1,00,000 1,20,000
(b) Inventories 7 2,14,000 90,000
(c) Cash and Cash Equivalents 1,80,000 1,20,000
Total 27,40,000 19,80,000
Notes to Accounts:
Question52. Following is the Balance Sheet of R.S. Ltd. as at 31st March, 2016:
Notes to Accounts
Additional Information:
Solution: CASH FLOW STATEMENT for the year ended 31st March, 2016
Particulars Rs Rs
I. Cash Flow from Operating Activities
Net Profit before Tax and Extraordinary Items (WN 1) 3,50,000
Add: Non-cash and Non-operating Charges:
Goodwill amortised 50,000
Depreciation on Machinery 1,10,000
Interest on Debentures (3,50,000 x 12/100) 42,000
Loss on Sale of Machinery 10,000
Operating Profit before Working Capital Changes 5,62,000
Less: Increase in Current Assets:
Inventories 50,000
Cash Generated from Operations 5,12,000
Less: Income Tax Paid (1,25,000)
Cash Flow from Operating Activities
II. Cash Flow from Investing Activities
Purchase of Machinery (WN 2) (7,00,000)
Sale of Machinery 30,000
Purchase of Non-current Investments (50,000)
Cash Used in Investing Activities (7,20,000)
III. Cash Flow from Financing Activities
Proceeds from Issue of Shares 2,00,000
Proceeds from Issue of 12% Debentures 1,00,000
Interest on Debentures Paid (42,000)
Bank overdraft (Raised) 75,000 3,33,000
Cash Flow from Financing Activities
IV. Net Increase in Cash and Cash Equivalents (I +II+ III) NILL
Add: Opening Balance of Cash and Cash Equivalents: 1,13,000
Current Investments and Cash and Cash Equivalents
Closing Balance of Cash and Cash Equivalents:
Current Investments and Cash and Cash Equivalents 1,13,000
Working Notes:
MACHINERY ACCOUNT
Particulars Rs Particulars Rs
To Balance b/d 10,55,000 By Bank A/c 30,000
To Bank A/c (Purchase)—Balancing 7,00,000 By Loss on Sale of Machinery A/c 10,000
Figure (Statement of Profit and Loss)
By Accumulated Depreciation A/c 40,000
By Balance c/d 16,75,000
17,55,000 17,55,000
ACCUMULATED DEPRECIATION ACCOUNT Cr.
Particulars Rs Particulars Rs
To Machinery A/c 40,000 By Balance b/d 1,40,000
To Balance c/d 2,10,000 By Statement of Profit and Loss 1,10,000
(Depreciation)—Balancing Figure
2,50,000 2,50,000
Question53. From the following Balance Sheet of I Ltd. as at 31st March, 2018, prepare Cash Flow
Statement:
Notes to Accounts
(i) During the year a piece of machinery costing 36,000 on which depreciation charged was 12,000
was sold for Rs 12,000. Depredation provided on Tangible Assets Rs 36,000.
(ii) Income Tax Rs 27,000 was provided.
(iii) Additional Debentures were issued at par on 1st October, 2017 and Bank Loan was repaid on
the same date.
(iv) The shareholders approved redemption of 10% Preference Shares of Rs 60,000 at a premium of
5% at their Annual General Meeting held on 20th September, 2017, although the terms of issue
did not provide for redemption at a premium. Accordingly, the shares were redeemed.
Question54. From the flowing Balance Sheet and information of XYZ Ltd , prepare Cash Flow Statement;
4. Trade Receivables
Sundry Debtors 2,00,000 1,00,000
Less: Provision for Doubtful Debts 15,000 10,000
1,85,000 90,000
You are informed that during the year:
i. A machine with a book value of Rs 40,000 was sold for Rs 25,000
iii. Preference shares were redeemed on 31st December 2017 at a premium of 5%.
Iv. An interim dividend @15% was paid on equity shares on 31st January 2018.
v. Dividend @ 12% was proposed on preference shares for the year ended on 31st March 2018 on Rs
1,00,000 and for the year ended on 31st march 2017 on Rs 2,00,000.
vi. Fresh equity shares were issued at a premium of 10% on 31st March 2018.
Question 55. Balance Sheet of XYZ Ltd. as at 31st March, 2019 is:
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible) 3,20,000 4,00,000
(b) Non-current Investments 60,000 50,000
2. Current Assets
(a) Current Investments 17,000 19,000
(b) Inventories 2,10,000 2,40,000
(c) Trade Receivables 4,55,000 2,10,000
(d) Cash and Cash Equivalents 1,80,000 1,30,000
Total 12,42,000 10,49,000
Notes to Account
During the year a piece of machinery, costing 24,000 on which accumulated depreciation was Rs 16,000
was sold for 6,000.Prepare cash flow statement (DELHI 2015)
Question 57. From the following Balance Sheet of X Ltd. as at 31st March, 2018, prepare Cash Flow
Statement.
Notes to Accounts
Question 58. From following Balance Sheet of Star Ltd. as at 31.3.2019, prepare cash flow statement.
Notes to Accounts
(1) During the Year, Machinery costing 20,000 (acc. depreciation of 15,000) was sold for 12,000.
(2) During the year, Non-current Investments were sold at a profit of 20%, which transferred to Capital
Reserve.
(3) Debentures were redeemed at par on 1st April, 2018.
(4) Tax of 15,000 was paid during the year.
(5) Interim Dividend paid during the year amount to 25,000.
Question 59. From the following Balance Sheet Hullu Ltd. Prepare cash flow statement.
Notes to Accounts
Additional Information:
2. Income tax paid during the year includes 15,000 paid towards Distribution Tax.
3. Land and Building of book value 1,50,000 was sold at a profit of 10%.