CASH FLOW STATEMENT

1. Meaning of Cash Flow Statement : It is a statement showing THE INFLOWS AND OUTFLOWS of
cash and cash equivalents during an accounting period .A cash flow statement provides information
about the historical changes in cash and cash equivalents by classifying cash flows into operating,
investing and financing activities.
Transactions that increase cash and cash equivalents are inflows of cash and cash equivalents and
transactions that decrease the cash is outflows of cash and cash equivalents.
2. Cash and Cash Equivalents As per AS-3, ‘cash’ comprises cash in hand and demand
deposits with banks, and ‘cash equivalents’ means short-term highly liquid investments
that are readily convertible into known amounts of cash.
Eg: marketable securities. (current investments)
Cash flow statement is prepared as per accounting standard 3 revised the accounting
standard prescribes that cash flow can be prepared either by
1. Direct method. ( not in syllabus)
2. Indirect method.
Cash flow statement is prepared under 3 heads namely:
1. Cash flow from operating activities
2. cash flow from investing activities
3. cash flow from financing activities

Benefits of Cash Flow Statement

⮚ It enables to assess the financial structure of an organization.

⮚ It helps in assessing the ability of the enterprise to generate cash and cash equivalents.
⮚ It also helps in fine tuning its cash inflow and cash outflow, keeping in response to changing
condition.
⮚ It helps in comparing inflows and outflows of cash.

Objectives of Cash Flow Statement

1. To ascertain how much cash or cash equivalents have been generated or used in
different activities i.e., operating / investing / financing activity.
2. To ascertain the net changes in cash and cash equivalents.
3. To assess the causes of difference between actual cash& cash
equivalents and related net earnings/income.
4. To help in formulation of financial policies such as dividend policy, fixed assets policy,
capital structure related policy.
5. To help in short-term financial planning.
6. To ascertain the liquidity of enterprises

Cash from Operating Activities

Cash flows from operating activities are primarily derived from the main activities of the
enterprise. They generally result from the transactions and other events that enter into the
determination of net profit or loss. Cash Inflows & Outflows from operating activities
Cash Inflow from Operating activities

⮚ Cash receipts from sale of goods and the rendering of services.

⮚ Cash receipts from royalties, fees, commissions and other revenues.
Cash Outflow from Operating activities

⮚ Cash payments to suppliers for goods and services.

⮚ Cash payments to and on behalf of the employees.
⮚ Cash payments to an insurance enterprise for premiums and claims, annuities, and other policy
benefits.
⮚ Cash payments of income taxes .

Cash from Investing Activities

Investing activities are the acquisition and disposal of long-term assets and other investments not
included in cash equivalents. Investing activities relate to purchase and sale of long-term assets
or fixed assets such as machinery, furniture, land and building, etc.

Cash Inflow from Investing Activities

⮚ Cash receipt from disposal of fixed assets including intangibles.

⮚ Cash receipt from the repayment of advances or loans made to
third parties. (except in case of financial enterprise).
⮚ Cash receipt from disposal of shares, warrants or debt instruments of other
enterprises except those held for trading purposes.
⮚ Interest received in cash from loans and advances.
⮚ Dividend received from investments in other enterprises.

Cash Outflow from Investing activities

⮚ Cash payments to acquire fixed assets including intangibles and capitalized research and
development.
⮚ Cash payments to acquire shares, warrants or debt instruments of other
enterprises other than the instruments those held for trading purposes.
⮚ Cash advances and loans made to third party (other than advances and loans
made by a financial enterprise wherein it is operating activities).

Cash flow from Financing Activities

Financing activities are activities that result in changes in the size and composition of the
owners’ capital and borrowings of the enterprise. Separate disclosure of cash flows arising
from financing activities is im- portant because it is useful in predicting claims on future cash
flows by providers of funds
Cash Inflows & Outflows from financing activities

Cash Inflows from Financing Activities

⮚ Cash proceeds from issuing shares (equity or/and preference).

⮚ Cash proceeds from issuing debentures, loans, bonds and other long term borrowings.

Cash Outflows in Financing Activities

⮚ Cash repayments of amounts borrowed.

⮚ Repayment and redemption of share capital.
⮚ Interest paid on debentures and long-term loans and advances.
 ⮚ Dividends paid on equity and preference capital.

CASH FLOW STATEMENT

CALCULATION OF NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS

Working note:

Balance in the statement of P/L a/c

(current year - previous year) xxxx
Add: Transfer to general reserve xxxx
Add: Provision for tax (current year) xxxx
Add: Proposed dividend (Previous year) xxxx
Add: Interim dividend xxxx
Less : Refund of tax xxxx

NET PROFIT BEFORE TAX AND

EXTRAORDINARY ITEMS xxxx

CASH FLOW STATEMENT AS ON ………..

PARTICULARS DETAILS AMOUNT

CASH FLOW FROM OPERATING ACTIVITY
NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS XXX

Add : NON OPERATING EXPENSES

I-interest on long term borrowings (debentures ,loans ,public
deposits) X
P -provision for doubtful debts X
L-loss on sale of assets X
D-depreciation X
A- Amortisation of Goodwill/trademark/copyright/patent X
D-discount on issue of debentures X

Less : NON OPERATING INCOME

X
G-gain on sale of assets X
R-rent received X
I-interest received X
D-Dividend received X

Operating profit before working capital changes XXXX

ADD: decrease in current assets/increase in current liabilities
Xxx
LESS: increase in current assets/decrease in current liabilities
 xxx
CASH FROM OPERATIONS
LESS : TAX PAID XXX
XXX
CASH FLOW/USED FROM OPERATING ACTIVITY (A) XXXX
CASH FLOW FROM INVESTING ACTIVITY
ADD: Sale of fixed assets / Investments XX
Interest received/ Dividend received/Rent received. XX
Decrease in short term loans and advances.
(XX)
LESS: Purchase of fixed assets / Investment/shares (XX)
LESS: Purchase of Intangible assets like PATENTS /
GOODWILL)
Increase in short term loans and advances
CASH FLOW/USED FROM INVESTING ACTIVITY (B) XX
CASH FLOW FROM FINANCING ACTIVITY

ADD: Issue of shares /issue of debentures/Loan taken. XXX

Increase in bank overdraft/ increase in Securities Premium XXX
Reserve. XXX
LESS: Redemption of preference shares / Redemption of
debentures/loan repaid
XXX
Interest paid /proposed dividend paid / Interim dividend paid
XXX
Decrease in bank overdraft/ cash credits
XXX
Decrease in Securities Premium Reserve.
XXX
Premium on Redemption of shares.
XXX

XXX

CASH FLOW FROM/ USED FROM FINANCING ACTIVITY (C ) XXX

NET CASH ( A + B + C ) XXX
ADD: Opening Balance of Cash/Bank and Cash Equivalents X
Opening Balance of marketable security X
Opening Balance of Current Investments X

CLOSING BALANCE OF CASH AND CASH EQUIVALENT X

ADJUSTMENT:

IN CASE OF CALCULATION OF INTEREST ON DEBENTURES / LOANS

(+NOE; - FINANCING ACTIVITY)

CASE 1 – No information is given – Calculate Interest on Opening Balance (PY)

CASE 2 – When Opening Date is given - Calculate Interest on Closing Balance (CY)

CASE 3 – When Closing Date is given – Calculate Interest on Opening Balance (PY)

CASE 4 – When date is given in the middle of the year

a. Calculate interest on opening balance

b. Count the number of months (from the date given in the question) on the difference and then ADD both
the amounts.

IN CASE OF CALCULATION OF INTEREST ON INVESTMENT

(-NOI ; +INVESTING ACTIVITY)

CASE 1 – No information is given – Calculate Interest on Opening Balance (PY)

CASE 2 – When Opening Date is given - Calculate Interest on Closing Balance (CY)

CASE 3 – When Closing Date is given – Calculate Interest on Opening Balance (PY)

CASE 4 – When date is given in the middle of the year –

a. Calculate interest on opening balance

b. Count the number of months (from the date given in the question) on the difference and then ADD both
the amounts

FORMAT OF ASSET ACCOUNT

CASE 1: When accumulated depreciation is not given (prepare only one account)

Asset a/c

PARTICULARS AMT PARTICULARS AMT

To Bal b/d (opening balance) (PY) X By Bank a/c (selling price) +IA X
To P/L a/c (profit) – NOI X By P/L a/c (loss) + NOE X
To bank a/c (purchases) -IA X By Depreciation + NOE X
By bal c/d (closing balance) (CY) X
X X
B.V = COST – ACC DEP.

LOSS = B.V - S.P. OR PROFIT = S.P. - B.V

 CASE 2: when accumulated depreciation is given and sale is also given in additional information (prepare
two accounts)
Asset a/c

PARTICULARS AMT PARTICULARS AMT

To Bal b/d (opening balance)(PY) X By Bank a/c (selling price) +IA X
To P/L a/c (profit/Gain) – NOI X By P/L a/c (loss) + NOE X
To bank a/c (purchases) -IA X By accumulated Depreciation X
By bal c/d (Closing balance)(CY) X
X X

ACCUMULATED DEP. A/C

PARTICULARS AMT PARTICULARS AMT

To Asset a/c (acc dep) X By Bal b/d (opening balance) X
(PY)
To Bal c/d (closing balance)(CY) X X
By Depreciation +NOE
X X

PROVISION FOR TAX

CASE 1 : When provision for taxation is given in the Balance Sheet under Current Liabilities

Closing balance Opening balance

(CY) (PY)
PROVISION FOR TAXATION XXX XXX
+WN -OP. A

CASE 2 : When Provision for Tax is given in balance sheet under current liabilities and in adjustment …
Prepare Provision for Tax A/C
PROVISION FOR TAX ACCOUNT

PARTICULARS AMT PARTICULARS AMT

To BANK a/c (tax paid) - OA X By Bal b/d (opening balance) X
(PY)
To Bal c/d(Closing balance)(CY) X X
By P/L a/c (Provision for tax)
Made/created/provided + WN
X X
 Financing Business Enterprise Transaction Treatment in Cash Flow Statement

Financing business enterprises are the business enterprises which deal in finance like
investment companies, mutual fund house and banks. These enterprises purchases and sale
securities as their stock, so it is treated as operating activities and interest received, dividend
received and interest paid are considered as routine business activities and included in their
operating activities.

VARIOUS ACTIVITIES IN CASE OF BANKING and NON-BANKING COMPANIES

PARTICULARS Interest Interest Paid Dividend Dividend
Received (OUTFLOW) Received paid
(INFLOW) (INFLOW) (OUTFLOW)
For Banking and Financing OPERATING OPERATING OPERATING FINANCING
Companies ACTIVITY ACTIVITY ACTIVITY ACTIVITY
For Non-banking and Non- INVESTING FINANCING INVESTING FINANCING
Financing Companies ACTIVITY ACTIVITY ACTIVITY ACTIVITY

MULTIPLE CHOICE QUESTIONS

1. Which of the following transactions will result into flow of cash?

(a) Cash withdrawn from bank Rs.20,000.
(b) Issued 3 20,000, % debentures for the vendors of machinery.
(c) Received Rs.19,000 from debtor.
(d) Deposited cheques of Rs.10,000 into bank.

ANSWER: (c) Received Rs.19,000 from debtor.

2. Operating profit of the year is Rs. 2,00,000. During the year, there was increase in
inventory by Rs. 90,000 and decrease in trade receivables of Rs. 50,000. What is the
amount of cash from operations?
(a) Rs. 60,000
(b) Rs.1,60,000
(c) Rs. 2,40,000
(d) Rs. 3,40,000

ANSWER: (b) Rs.1,60,000

3. Income tax paid is concerned with:

(a) Operating activities
(b) Investing activities
(c) Financing activities
(d) None of these
ANSWER: (a) Operating activities

4. In the case of financial enterprises, the cash flow resulting from interest and
dividend received and interest paid should be classified as cash flow from:
(a) Operating activities
(b) Investing activities
(c) Financing activities
(d) None of the above
ANSWER: (a) Operating activities
5. If fixed tangible assets whose original cost is Rs.40,000 having accumulated
depreciation Rs.12,000 were sold for Rs. 34,000 then, while preparing cash flow
statement, its effect on cash flow will be:
(a) Cash flow from financing activities Rs.34,000
(b) Cash flow from financing activities Rs.6,000
(c) Cash flow from investing activities Rs.34,000
(d) Cash flow from investing activities Rs.6,000
ANSWER: (c) Cash flow from investing activities Rs.34,000

ASSERTION REASONING QUESTIONS (ARQs)

1. Assertion (A): Depreciation and amortisation of Goodwill is added to the net

profit before tax to compute cash operating profit.
Reason (R): Depreciation and amortisation of goodwill are non-cash expenses and therefore
added back to net profit as cash flow statement is prepared on cash basis of Accounting.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(c) (A) is true but (R) is false.
(d) (A) is false but (R) is true.

2. Assertion (A): Sale of fixed assets is written under the Investing Activities.
Reason (R): Sale of fixed assets leads to inflow of cash under investing activity as investing
activities are the acquisition and disposal of long-term assets and other investments not
included in cash equivalents.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(c) (A) is true but (R) is false.
(d) (A) is false but (R) is true.

3. Assertion (A): Proceeds from issue of shares and debentures are recorded in Financing
Activity. Reason (R): Issue of shares and debentures brings changes in composition and
size of owner's capital and borrowings of an enterprise. It provides inflow to finance the
company.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(c) (A) is true but (R) is false.
(d) (A) is false but (R) is true.

4. Assertion (A) : Sale of Building is an Operating Activity for a Real Estate Company.
Reason (R) : Sale/Purchase of property is not the principal revenue producing activity for a
Real Estate Company.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(c) (A) is true but (R) is false.
(d) (A) is false but (R) is true.

5. Assertion (A): Cash deposited into bank will result in Flow of Cash or Cash Equivalents.
Reason (R): Cash deposited into bank is a movement between items of Cash and Cash Equivalents.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
 (b) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(c) (A) is true but (R) is false.
(d) (A) is false but (R) is true.
(ANSWERS ARE HIGHLIGHTED)

EXERCISE

1. Prepare ‘Provision for Income Tax Account’ from the following information for preparing Cash Flow
Statement :

1st April 2022 1st April 2023

Provision for Income Tax Rs. 1,50,000 Rs. 2,10,000

Additional Information :

Provision for Income tax made during the year 2023 was Rs.2,35,000.

Answer:

PROVISION FOR INCOME TAX ACCOUNT

Particulars Rs. Particulars Rs.

To Bank A/c (Balancing figure, 1,75,000 By Balance b/d 1,50,000

being payment made)

To balance c/d (given)

2,10,000 By Statement of Profit & 2,35,000
Loss(provision made)

3,85,000 3,85,000

2. Calculate Cash flow from Investing Activities from the following particulars :

1st April 2023 1st April 2024

Plant & Machinery (Written down value) 7,20,000 8,60,000

Information :

Depreciation charged during the year Rs.85,000.

Plant & Machinery having a written down value Rs.1,10,000 was sold for Rs.
1,25,000.
Answer:

CASH FLOW FROM INVESTING ACTIVITIES

PARTICULARS Amount
Proceeds from Sale of Plant & Machinery 5.000
Purchase of Plant & Machinery (35,000)
30.000
Working Note :

PLANT & MACHINERY ACCOUNT

Particulars Rs. Particulars Rs.

To balance b/d 7,20,000 By Bank A/c (Sale 1,25,000
To Gain on Sale of 15,000 proceeds)
Plant & Machinery By Depreciation A/c 85,000
To Bank 3,35,000 By Balance c/d 8,60,000
A/c(Balancing
figure, being
purchase)
10,70,000 10,70,000

3. From the following information, calculate Cash Flow from Investing Activities:

Particulars 31st March 2024 31st March 2023

Machinery (at cost) 5,50,000 5,00,000

Accumulated 1,70,000 1,00,000
Depreciation

During the year, a machinery costing ₹ 50,000 (accumulated depreciation provided thereon ₹ 20,000)
was sold for ₹ 26,000.
Answer : Working note

Machinery Account
Dr Cr
Particulars Amount Particulars Amount
To balance b/d 5,00,000 By Bank (selling price) 26,000
By Acc dep a/c 20,000
By P/L a/c (loss) 4,000
To Bank (purchases) 1,00,000 By balance c/d 5,50,000

6,00,000 6,00,000

Accumulated Depreciation A/C

Dr Cr
Particulars Amount Particulars Amount
To Machinery A/c 20,000 By Balance b/d 1,00,000

To Balance c/d 1,70,000 By Depreciation a/c 90,000

1,90,000 1,90,000
 CASH FLOW STATEMENT
Particulars Amount
Purchase of machinery (1,00,000)
Sale of machinery 26,000
Cash used in investing activities (74,000)

4. A company had following balances

Investment in the beginning = 34000
Investment at the end = 28000
During the year, company sold 40% of its investments held in the beginning of the
period at a profit of 8400. calculate cash flow form investing activity.
Answer : Working Note

INVESTMENT A/C

Dr Cr

Particulars Amount Particulars Amount

To balance b/d 34,000 By Bank (S.P) 22,000
TO P/L A/C (gain on sale ) 8,400
To Bank (purchase) 7,600 By balance c/d 28,000

50,000 50,000

CASH FLOW STATEMENT

Particulars Amount
Purchase of investment (7,600)
Sale of investment 22,000
Cash flow in investing activities 14,400
st
5. Following are the Balance sheets of K Ltd. for the year ended 31 March 2022 and 2023
Particulars Note
No 31st 31st
March, 2023 March,2022
(Rs) (Rs)
I EQUITY AND LIABILITIES
1. Shareholders Funds
(a) Share Capital 12,00,000 8,00,000
(b) Reserves and Surplus 3,50,000 4,00,000
(Surplus i,e, Balance in
Statement of Profit and Loss)
2. Non Current Liabilities
4,40,000 3,50,000
Long Term Borrowings
3. Current Liabilities
Trade Payables 60,000 50,000
Total 20,50,000 16,00,000
II ASSETS
 [Link] Current Assets Property,
Plant and Equipment and
tangible asset:
Plant and Equipment 12,00,000 9,00,000
2. Current Assets
(a) Inventories 2,00,000 1,00,000
(b) Trade Receivables 3,10,000 2,30,000
(c) Cash and Cash Equivalents 3,40,000 3,70,000
Total 20,50,000 16,00,000

Prepare Cash Flow Statement after considering the following adjustments:

1. The Company paid interest Rs.36,000 on its long term borrowings
2. Depreciation charged on tangible assets was Rs.1,20,000.
Answer :

CASH FLOW STATEMENT

Particulars Rs Rs
Cash flows from operating activities
Surplus i,e Balance as per Statement of Profit/ Loss (50,000)
Add : Depreciation 1,20,000
Interest on long term borrowing 36,000
Operating profit before working capital 1,06,000
changes
Add : Decrease in CA and increase in CL
Less : Increase in CA and decrease in CL
Trade payables 10,000
Inventories (1,00,000)
Trade receivables (80,000) (1,70,000)
Cash flows used in operating activities (A) (64,000)
Cash flows from Investing activities
Purchase of tangible fixed assets (4,20,000)
Cash used in Investing activities (B) (4,20,000)
Cash flows from Financing activities
Issue of Shares 4,00,000
Interest on long term borrowings (36,000)
Long term borrowing taken 90,000
Cash flows from Financing activities (C) 4,54,000
Net decrease in cash ans cash equivalents (A+B+C ) (30,000)
Add : Cash and cash equivalents in the beginning 3,70,000
Cash and cash equivalents at the end 3,40,000

Working note : net profit before Tax and extraordinary items

Balance in the statement in the profit and loss a/c 3,50,000

4,00,000

N.P.B.T (50,000)
 Plant Property and Equipment Account

Particulars Amount Particulars Amount

To balance b/d 9,00,000
By dep a/c +NOE 1,20,000

To Bank (purchases)-IA 4,20,000 By balance c/d 12,00,000

13,20,000 13,20,000

6. On the basis of information given by Mradul Ltd., prepare Cash Flow Statement for the year ending 31st March,
2023:

Particulars Note 31-03-2022 31-03-2023

No.
I. EQUITY AND LIABILITIES
1. Shareholder’s funds:
a) Share Capital 5,00,000 7,30,000
b) Reserve and Surplus 1 3,50,000 3,70,000
2. Non-current Liabilities:
Long term borrowings 2 4,00,000 2,00,000
3. Current Liabilities:
a) Trade Payables 3 3,60,000 4,60,000
b) Short term provisions 4 3,25,000 3,20,000
Total 19,35,000 20,80,000
II. ASSETS

1. Non-current Assets:
a) Property, Plant & Equipment and Intangible
Assets 5 4,50,000 5,00,000
i. Property, Plant & Equipment 6 3,10,000 3,02,000
ii. Intangible Assets 4,00,000 4,30,000
b) Long-term Loans & Advances
2. Current Assets: 7 2,70,000 2,90,000
a) Inventories 2,40,000 2,60,000
b) Trade Receivables 2,65,000 2,98,000
c) Cash and Cash Equivalents 19,35,000 20,80,000
Total

NOTES TO ACCOUNTS

S.N. Particulars 31-03-2022 31-03-2023

(₹) (₹)
1 Reserves and Surplus
Surplus i.e. balance in statement of profit and loss 3,50,000 3,70,000
2 Long term borrowings
10% debentures 4,00,000 2,00,000
3 Trade Payables
Creditors 2,40,000 2,60,000
 Bills Payable 1,20,000 2,00,000
4 Short term provisions
Provision for Taxation 3,25,000 3,20,000
5 Property, Plant & Equipment
Machinery 5,50,000 6,60,000
Accumulated Depreciation 1,00,000 1,60,000
4,50,000 5,00,000
6 Intangible Assets
Patents 3,10,000 3,02,000
7 Inventories
Stock in trade 2,70,000 2,90,000

Additional Information:

(i) Debentures were redeemed on 1st April,2022.

(ii) Tax paid during the year ₹2,80,000.
ANSWER:
CASH FLOW STATEMENT
Particulars Amount Amount
(A) Cash Flow from Operating Activities Net
Profit before Tax and Extraordinary Items Add: 2,95,000
Depreciation on Machinery 60,000
Add: Patents written off 8,000
Add: Interest on Debentures 20,000
Operating Profit before Working Capital Changes 3,83,000
Add: Increase in Current Liabilities 20,000
Increase in Creditors 80,000
Increase in Bills Payable
Less: Increase in Current Assets:
Increase in Inventories (20,000)
Increase in Trade Receivables (20,000)
Cash Generated from Operating Activities 60,000
Less: Tax paid (2,80,000) (2,20,000)
Cash Flow from Operating Activities 1,63,000
(B) Cash Flow from Investing Activities
Purchase of Machinery (1,10,000)
Investments in Long-term Loans & Advances Cash (30,000)
Used in Investing Activities (1,40,000)
(C) Cash Flow from Financing Activities
Cash Proceeds from Issue of Share Capital 2,30,000
Redemption of 10% Debentures (2,00,000)
Interest on Debentures (20,000)
Cash Flow from Financing Activities 10,000
Net Increase/Decrease in Cash and Cash Equivalents
(A+B+C) 33,000
Add: Opening Cash and Cash Equivalents: 2,65,000
Closing Cash and Cash Equivalents: 2,98,000

Working Notes:
1. Calculation of Net Profit before Tax and Extraordinary Items:

Particulars Amount (₹)

Closing Surplus i.e. Balance of Statement of Profit and Loss 3,70,000
Less: Opening Surplus i.e. Balance of Statement of Profit and Loss (3,50,000)
Profit for the year Add: 20,000
Provision for Tax 2,75,000
Net Profit before Tax and Extraordinary Items 2,95,000

Provision for Tax Account

 Particulars Amount Particulars Amount
Bank A/c 2,80,000 Balance b/d 3,25,000
Balance C/d 3,20,000 Statement of Profit and Loss 2,75,000
6,00,000 6,00,000

PRACTISE QUESTIONS

[Link] the following information, calculate Cash Flow from Operating Activities and
Investing Activities:

Particulars 2023 2022

Surplus, i.e., Balance in Statement of Profit & Loss 4,00,000 (1,00,000)
Provision for Tax 30,000 30,000
Trade Payables 1,50,000 40,000
Current Assets (Trade Receivables and Inventories) 5,20,000 4,60,000
Property, Plant and Equipment and Intangible
Assets:Fixed Assets(Net) 12,40,000 10,20,000
Non-current Investments 1,60,000 60,000

Additional Information: 1. During the year, a machine costing Rs.1,40,000 (Depreciation

provided thereon Rs.60,000) was sold for Rs.50,000.

2. Depreciation charged was Rs.1,40,000.

3. Tax paid was Rs.30,000.

4. At the end of the year, investment costing Rs.80,000 was sold at a profit of 25%.

Q2. a) From the following information, Calculate Cash from Operating Activities:

Particulars Note 31st March 31st March

No. 2023 (RS.) 2024 (Rs.)

Surplus : Balance in Statement of P/L 6,00,000 5,00,00

Provision for Tax 1,00,000 2,00,000

Trade receivable 2,00,000 2,40,000

Trade Payables 1,50,000 2,00,000

Patents 2,00,000 1,50,000

Additional Information:

Proposed Dividend for the year ended March 31, 2023 and March 31, 2024 was
Rs.1,50,000 and Rs.1,80,000 respectively.

b) From the following information, Calculate Cash from Investing Activities:

Particulars March31, 2023 March 31,2024

(Rs.) (Rs.)

Machinery at Cost 20,00,000 28,00,000

Accumulated Depreciation 4,00,000 650,000

Additional Information:

[Link] the year Machinery costing Rs. 50,000 (Book Value Rs.40,000)

was lost by fire and received a claim of Rs.32,000 from insurance Company.

[Link] Charged during the year was Rs. 2,60,000

Q3. (a) From the following information, calculate Cash flow from Operating Activities.

Particulars 31 Mar 2023 31 Mar 2024

Surplus i.e Balance in Statement of Profit and Loss 7,00,000 5,00,000
Provision for Tax 1,00,000 1,50,000
Trade Receivables 2,00,000 2,50,000
Trade Payables 1,40,000 2,00,000
Goodwill 2,00,000 1,50,000

Additional Information: -

Proposed Dividend for the year ended March 31, 2023 and March 31, 2024 was Rs.2,00,000
and Rs. 2,80,000 respectively.
 (b) From the following information calculate the Cash from Investing Activities
Particulars 31 Mar 2023 31 Mar 2024
Machinery (Cost) 20,00,000 30,40,000
Accumulated Depreciation 3,00,000 5,00,000
Additional Information:-

[Link] costing Rs. 60,000 (Book Value Rs. 40,000) was lost by fire and insurance
claim of Rs. 40,000 was received.
[Link] charged during the year was Rs. 3,00,000.
3. A part of Machinery costing Rs. 2,00,000 was sold at a loss of Rs. 30,000.

Q4. Following is the Balance Sheet of J.M. Ltd as at 31.3.2021:

Particulars Note No. 31.3.2021 31.3.2020

I - Equity and Liabilities:

1 Shareholder's Funds:
(a)Share Capital 2,25,000 175,000
(b) Reserves and Surplus 1 62,500 25,000

2 Non-Current Liabilities:
Long-Term Borrowings 2 1,12,500 87,500

3 Current Liabilities:
(a) Short-term Borrowings 3 37,500 18,750
(b) Short-Term Provisions 4 50,000 31,250

Total 487,500 337,500

II - Assets:

1 Non-Current Assets:
(a) Fixed Assets:
Tangible 5 366,250 228,750
Intangible: Goodwill 25,000 37,500

(b) Non-Current Investments 37,500 25,000

2 Current Assets:
(a) Current Investments 10,000 17,500
(b) Inventories 30,500 18,000
 (c) Cash and Cash Equivalents 18,250 10,750

Total 487,500 337,500

Note
Particulars 31.3.2021 31.3.2020
No.
1 Reserves and Surplus (Surplus
i.e., Balance in the Statement of 62,500 25,000
Profit and Loss) 62,500 25,000

2 Long-term Borrowings
12% Debentures 112,500 87,500
112,500 87,500

3 Short-term Borrowings
Bank Overdraft 37,500 18,750
37,500 18,750

4 Short-term Provisions
Proposed Dividend 50,000 31,250
50,000 31,250

5 Tangible Assets
Machinery 3,66,250 2,28,750

366,250 228,750

Additional Information
(i) Rs.25,000, 12%debentures were issued on 31.3.2021.
(ii) During the year a piece of machinery costing Rs.20,000, on which accumulated
depreciation was Rs.10,000, was sold at a loss of Rs.2, 500. Depreciation for the
year is Rs.10, 000
Prepare Cash Flow Statement. 6