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प्रश्न
While preparing Cash Flow statement of Sharda Ltd. 'Depreciation provided on fixed assets' was added to net profit to calculate cash flow from operating activities. Was the accountant correct in doing so? Give reason.
उत्तर
Depreciation of fixed assets is the non-cash expense. It must have been deducted from Net Profit while preparing Profit and Loss Account. Therefore; in Cash Flow Statement it must be added back to Net Profit before taxation and extraordinary items under Cash Flow from Operating Activities. Thus, the accountant of Sharda Ltd. is correct.
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संबंधित प्रश्न
Following is the Balance Sheet of K K Ltd as at 31-3-2015:
K.K. Ltd Balance Sheet as at 31-3-2015
| Particulars | Note No. | 31-3-2015 (Rs.) | 31-3-2014 (Rs.) |
|
I. Equity and Liabilities 1. Shareholder’s Funds a. Share Capital b. Reserve and Surplus 2. Non - Current Liabilities a) Long – term borrowings 3. Current Liabilities a) Short – term borrowings b)Short – term provisions |
1
2
3 4 |
10,00,000 4,00,000
9,00,000
3,00,000 1,40,000 |
8,00,000 (1,00,000)
10,00,000
1,00,000 1,80,000 |
| Total | 27,40,000 | 19,80,000 | |
|
II. Assets 1. Non – Current Assets a) Fixed Assets Tangible assets Intangible assets b) Non – Current Investments 2. Current Assets a) Current Investments b) Inventories c) Cash and Cash |
5 6
7
|
20,06,000 40,000 2,00,000
1,00,000 2,14,000 1,80,000 |
14,40,000 60,000 1,50,000
1,20,000 90,000 1,20,000 |
| Total | 27,40,000 | 19,80,000 |
| Note No | Particulars | 31-3-2015(Rs.) | 31-3-2014(Rs.) |
|
1.
|
Reserve and Surplus (Surplus i.e. Balance in Statement of Profit and Loss) |
4,00,000 |
(1,00,000) |
| 4,00,000 | (1,00,000) | ||
|
2.
|
Long term borrowings : 12 % Debentures |
9,00,000 |
10,00,000 |
| 9,00,000 | 10,00,000 | ||
|
3.
|
Short – term borrowings : Bank Overdraft |
3,00,000 |
1,00,000 |
| 3,00,000 | 1,00,000 | ||
|
4.
|
Short – term provisions Provisions for tax |
1,40,000 |
1,80,000 |
| 1,40,000 | 1,80,000 | ||
|
5.
|
Tangible Assets Machinery Accumulated Depreciation |
24,06,000 (4,00,000) |
16,42,000 (2,02,000) |
| 20,06,000 | 14,40,000 | ||
|
6.
|
Intangible Assets Goodwill |
40,000 |
60,000 |
| 40,000 | 60,000 | ||
|
7.
|
Inventories Stock in trade |
2,14,000 |
90,000 |
| 2,14,000 | 90,000 |
Additional Information
(i) 12% Debentures were redeemed on 31-3-2015
(ii) Tax 1,40,000 was paid during the year
Prepare Cash flow Statement.
State the objective of preparing ‘Cash Flow statement’.
State whether the following will increase, decrease or have no effect on cash flow from operating activities while preparing 'Cash Flow Statement':
1) A decrease in outstanding employees benefits expenses by Rs 3,000
2) Increase in prepaid insurance by Rs 2,000
While preparing the Cash Flow Statement of Alka Ltd. 'dividend paid' was shown as an operating
activity by the accountant of the company. Was he correct in doing so? Give reason.
What is meant by 'Cash from Operating Activities'?
State the purpose of preparing a ‘Cash Flow Statement’.
Give the meaning of ‘Cash Flow’.
While preparing Cash Flow Statements, What type of activity is ‘Payments of cash to aquire shares of another company by a trading company’.
Redemption of debentures would result in inflow, outflow on no flow of cash? Give your answer with reason.
Short Answer Question
“The nature/type of enterprise can change altogether the category into which a particular activity may be classified.” Do you agree? Illustrate your answer.
Long Answer Question
Explain the major Cash Inflows and outflows from financing activities.
______ means short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
Name the activities that constitute the primary or main activities of an enterprise?
Which one is Cash Inflows from operating activities?
Which one is Cash Outflows from operating activities?
Classify the following activity into operating activities, investing activities, financing activities or cash activities.
"Cash Sales"
Classify the following activity into operating activities, investing activities, financing activities or cash activities.
"Cash receipt from debtors"
Classify the following activity into operating activities, investing activities, financing activities or cash activities
"Proceeds from sales of old machinery"
Balance Sheet (Extract)
| Liabilities | 30-03-2018 (₹) | 31-03-2017 (₹) |
| Fixed Assets | 23,80,000 | 17,50,000 |
Depreciation on fixed assets was ₹ 2,00,000 for the year. How much amount for 'Purchase of fixed assets' will be shown in investing activity for cash flow statement prepared on 31st March, 2018?
An example of Cash Flows from Operating Activity is ______
