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From the following extracts of a company’s Balance Sheets, and the additional information, you are required to calculate Cash from Operating Activities for the year ending 31st March, 2021.
Anjan Ltd. reported a profit of ₹ 80,000 for the year ended 31st March, 2021, after considering the following:
| Particulars | (₹) |
| (i) Tax provided during the year | 4,000 |
| (ii) Amortization of Patents | 10,000 |
| (iii) Profit on sale of Vehicle | 3,000 |
| (iv) Writing off Preliminary expenses | 2,000 |
| During the year, machinery costing ₹ 40,000 (accumulated depreciation thereon being ₹ 18,000) was sold for ₹ 6,000. |
|
| 31.03.2021 (₹) | 31.03.2020 (₹) | |
| Trade Receivable | 20,000 | 16,000 |
| Inventory | 12,000 | 15,000 |
| Cash at Bank | 8,000 | 10,000 |
| Trade Payable | 9,000 | 11,000 |
| Marketable Securities | 5,000 | 2,000 |
| Plant & Machinery | 88,000 | 1,30,000 |
Concept: Calculation of Net Cash Flows from Operating Activities Based on Indirect Method
While preparing its Cash Flow Statement, will a company consider an increase in its Bank Overdraft as an Operating Activity or as a Financing Activity?
Concept: Preparation of Cash Flow Statement on Basis of Financing Activities
From the following information of Hoopla Ltd., you are required to prepare a Cash Flow Statement (as per AS 3) for the year 2021 - 22.
| Particulars | (₹) | |
| (i) | Profit for the year 2021-22, before considering dividend and tax but after taking into account the following items: |
15,80,000 |
| (a) Depreciation on Property, Plant & Equipment | 5,50,000 | |
| (b) Interest Payable on Bank Loan | 3,80,000 | |
| (c) Profit on sale of investments, the book value of which was ₹ 2,20 000. |
1,00,000 | |
| (ii) | During the year 2021-22: | |
| (a) The company | ||
| • Paid Tax (which was provided in 2020 - 21) | 4,40,000 | |
| • Issued 66,000 equity shares of ₹ 10 each | 6,60,000 | |
| • Repaid Bank Loan | 15,00,000 | |
| • Paid interest on Bank Loan | 3,00,000 | |
| • Paid Dividend | 5,00,000 | |
| (b) Trade payables decreased by | 10,000 | |
| (c) Cash at bank increased from ₹ 60,000 on 1st April, 2021 to ₹ 7,00,000 on 31st March, 2022. |
Concept: Concept of Cash Flow Statement
From the following Balance Sheets of Rainbow Ltd., you are required to prepare a Cash Flow Statement (as per As 3) for the year 2021 - 22.
| Balance Sheets of Rainbow Ltd. As at 31st March, 2022 and 31st March, 2021 |
|||
| Particulars | Note no. | 31.3.2022 (₹) |
31.3.2021 (₹) |
| I. Equity and liabilities | |||
| 1. Shareholder's Funds | |||
| (a) Share Capital (Equity) | 4,00,000 | 4,00,000 | |
| (b) Reserve and Surplus | 1 | 1,60,000 | 1,20,000 |
| 2. Non-Current Liabilities | |||
| Long-term Borrowings (5% Debentures) | 3,50,000 | 2,60,000 | |
| 3. Current Liabilities | |||
| Short term Provision (Provision for Tax) | 30,000 | 25,000 | |
| Total | 9,40,000 | 8,05,000 | |
| II. Assets | |||
| 1. Non-Current Assets | |||
| Property, Plant & Equipment & Intangible Assets | |||
| (i) Property, Plant & Equipment (Plant & Machinery) | 6,00,000 | 7,80,000 | |
| 2. Current Assets | |||
| Cash & Bank Balances (Cash at Bank) | 3,40,000 | 25,000 | |
| Total | 9,40,000 | 8,05,000 | |
Notes to Accounts:
| Particulars | 31.3.2022 (₹) | 31.3.2021 (₹) |
| I. Reserves and Surplus | ||
| General Reserve | 30,000 | 20,000 |
| Balance in Statement of Profit and Loss | 1,30,000 | 1,00,000 |
Additional Information:
During the year 2021-22, the company:
- Sold a machine for ₹ 90,000 at a loss ₹10,000.
- Issued the 5% Debentures on 31st March; 2022, at a discount of 10%. The discount was written off from General Reserve.
Concept: Concept of Cash Flow Statement
The following balances have been extracted from the books of Meadow Ltd. as at 31st March, 2023.
| Particulars | (₹) | Particulars | (₹) |
| Capital Reserve | 1,20,000 | Bank Overdraft | 40,000 |
| Plant and Machinery (at cost) | 6,00,000 | Bills Receivables | 20,000 |
| Land and Building | 6,80,000 | Patents | 80,000 |
| Statement of Profit & Loss (Dr.) | 1,70,000 | Sundry Debtors | 90,000 |
| Short-term Loans and Advances | 50,000 | Provision for Doubtful Debts | 10,000 |
| Cash & Bank Balances | 1,60,000 | Inventories | 30,000 |
| Trade Payables | 90,000 | Share Capital | 12,20,000 |
| Accumulated depreciation on Plant and Machinery | 1,00,000 | 5% Debentures (1/5 of the Debentures to be redeemed on 31st March, 2024) | 3,00,000 |
Additional Information:
- The company had issued 1,25,000 Equity shares of ₹ 10 each which were all applied for and allotted to the public. These shares were fully called up by the company.
- There were calls-in arrears @ ₹ 2 per share on 15,000 shares out of which 5,000 shares were forfeited by the company.
You are required to:
- Show the Share Capital in the Notes to Accounts.
- Give the amount for each of the following:
- Short-term borrowings
- Current Assets
- Property, Plant and Equipment and Intangible Assets
- Property, Plant and Equipment
Concept: Preparation of Cash Flow Statement on Basis of Financing Activities
While preparing its Cash Flow Statement, which of the following will be classified by a company as its Cash Outflow from Investing Activities?
P: Investment in Government Securities.
Q: Investment in bank deposits (having maturity of six months).
R: Proceeds from redemption of liquid mutual fund units.
S: Proceeds from bank deposits with original maturity of less than three months.
Concept: Preparation of Cash Flow Statement on Basis of Financing Activities
Based on the following information of Neon Ltd., answer the questions given below in relation to the Cash Flow Statement of the company for the year 2022-23.
| Particulars | 31/03/2023 (₹) | 31/03/2022 (₹) |
| Provision for Tax | 80,000 | 50,000 |
| 7% Debentures | 8,00,000 | 3,00,000 |
| Unclaimed Dividend | 6,000 | - |
| Plant & Machinery (at book value) | 1,00,000 | 1,00,000 |
| Land | 4,50,000 | 6,00,000 |
Note: Dividend proposed in the years 2021-22 and 2022-23 were ₹ 30,000 and ₹ 40,000 respectively.
Additional information:
During the year 2022-23, the company:
- Provided ₹ 75,000 for tax.
- Issued 7% Debentures at a discount of 5%.
- Purchased Plant & Machinery for ₹ 40,000.
- What is the amount of tax paid by the company?
- Give the reason for the opening book value and closing book value of Plant & Machinery remaining the same, despite the purchase of a machine during the year.
- What is the inflow of cash from the issue of 7% Debentures?
- Give the company's outflow of cash for dividend paid to the shareholders.
- State with reason whether Neon Ltd. will consider the decrease in the amount of land as an Operating Activity or as an Investing Activity, while preparing its Cash Flow Statement.
Concept: Preparation of Cash Flow Statement on Basis of Operating, Investing
From the following Balance Sheets of Halogen Ltd., you are required to prepare a Cash Flow Statement (as per AS 3) for the year 2022-23.
| Balance Sheets of Halogen Ltd. As at 31st March, 2023 and 31st March, 2022 |
|||
| Particulars | Note No. | 31-3-2023 (₹) | 31-3-2022 (₹) |
| I EQUITY AND LIABILITIES | |||
| 1. Shareholder's Funds | 4,50,000 | 4,00,000 | |
| (a) Share Capital (Equity shares @ ₹ 10 each) | |||
| (b) Reserves and Surplus (Statement of P/L) | 1,06,000 | (20,000) | |
| 2. Non-Current Liabilities | 6,00,000 | 4,00,000 | |
| Long-term Borrowings (15% Debentures) | |||
| 3. Current Liabilities | 50,000 | 70,000 | |
| Short-term Provisions (Provision for Tax) | |||
| Total | 12,06,000 | 8,50,000 | |
| II ASSETS | |||
| 1. Non-current Assets | 4,80,000 | 7,00,000 | |
| Property, Plant & Equipment & Intangible Assets | |||
| (i) Property, Plant & Equipment | 1. | ||
| 2. Current Assets | 2,56,000 | 10,000 | |
| a) Current Investments | |||
| b) Cash & Bank Balances (Cash at Bank) | 4,70,000 | 1,40,000 | |
| Total | 12,06,000 | 8,50,000 | |
Notes to Accounts:
| Particulars | 31-3-2023 (₹) | 31-3-2022 (₹) |
| I. Property, Plant & Equipment | 7,42,000 | 9,00,000 |
| Plant & Machinery | ||
| Less: Accumulated Depreciation | (2,62,000) | (2,00,000) |
Additional Information:
During the year 2022-23, the company:
- Issued additional debentures on 1st October, 2022.
- Sold Plant & Machinery, the book value of which was ₹ 1,20,000 (accumulated depreciation ₹ 38,000), for ₹ 50,000.
Concept: Calculation of Net Cash Flows from Operating Activities Based on Indirect Method
Read the news item given below and answer the questions which follow:
|
Tata Consultancy Services ₹ 17,000 crore share buyback programme will open on December 1 and close on December 7, India’s largest software exporter said on Tuesday. “The company believes that the buyback is not likely to cause any material impact on the profitability or earnings of the company except to the extent of reduction in the amount available for investment, which the company could have otherwise deployed towards generating investment income”, TCS said in a regulatory filing. |
How would the Cash Flow from Investing Activities of TCS be affected, if instead of buying back its shares, the company had proceeded with its investing programme?
Concept: Preparation of Cash Flow Statement on Basis of Operating, Investing
Anand Ltd. reported a loss of ₹ 80,000 for the year ended 31st March, 2024, after considering the depreciation charged on Plant & Machinery represented by ‘??’ and the following items:
| (₹) | |
| (a) Tax provided during the year | 84,000 |
| (b) Loss on sale of Plant & Machinery | 15,000 |
| (c) Interest on Short-term Loans and Advances | 2,000 |
| (d) Depreciation on Plant & Machinery | ?? |
Additional information:
1. During the year 2023-24:
- A machine having a book value ₹ 40,000, was disposed of for ₹ 25,000 and a machine costing ₹ 2,20,000 was purchased.
- Credit sales were ₹ 1,00,000
2. An extract of the balance sheet of the company as at 31st March, 2023, and as at 31st March, 2024:
| Particulars | 31st March, 2024 (₹) | 31st March, 2023 (₹) |
| Trade Receivable | 20,000 | 15,000 |
| Cash at Bank | 8,000 | 10,000 |
| Short-term Loans and Advances | 49,000 | 11,000 |
| Trade Payables | 5,000 | 2,000 |
| Plant & Machinery (At Net Value) | 6,00,000 | 4,90,000 |
| Provision for depreciation | 1,50,000 | 1,10,000 |
- You are required to calculate for the year 2023-24: (Show the workings clearly)
- The net operating profit of the company before working capital changes.
- Cash from Investing Activity.
- Taking the information of credit sales into consideration, state with reason, whether the increase in Trade Receivables in the year 2023-24 over the year 2022-23 will cause the cash from operating activities before tax paid to be more or less then the net operating profit of the company before its working capital changes.
Concept: Preparation of Cash Flow Statement on Basis of Operating, Investing
From the following Balance Sheets of Ronald Ltd., you are required to prepare a Cash Flow Statement (as per AS 3) for the year 2023-24.
| Balance Sheets of Ronald Ltd. As at 31st March, 2024 and 31st March, 2023 |
|||
| Particulars | Note No. | 31.03.2024 (₹) | 31.03.2023 (₹) |
| I. EQUITY AND LIABILITIES | |||
| 1. Shareholder's Funds | |||
| (a) Share Capital | 6,00,000 | 6,00,000 | |
| (b) Reserves and Surplus (Statement of P & L) | 80,000 | (60,000) | |
| 2. Non-Current Liabilities | |||
| Long Term Borrowings | 1,00,000 | 1,50,000 | |
| 3. Current Liabilities | |||
| (a) Short-term borrowings (Bank overdraft) | 1,75,000 | 22,000 | |
| (b) Short Term Provisions (Provision for Tax) | 15,000 | 28,000 | |
| Total | 9,70,000 | 7,40,000 | |
| II. ASSETS | |||
| 1. Non-Current Assets | |||
| (a) Property, Plant & Equipment & Intangible Assets | |||
| (i) Property, Plant & Equipment (Plant & Machinery) | 5,50,000 | 6,40,000 | |
| (b) Non- Current Investments (7% Debentures of Violet Ltd.) | 1,40,000 | 50,000 | |
| 2. Current Assets | |||
| Cash & Bank Balance (Bank) | 2,80,000 | 50,000 | |
| Total | 9,70,000 | 7,40,000 | |
Additional information:
- The Debentures of Violet Ltd. were purchased on 31st March, 2024.
- During the year 2023-24:
- Tax of ₹ 20,000 was paid.
- Interest on all borrowings due and paid was ₹ 25,000.
Concept: Concept of Cash Flow Statement
Which one of the following analysis is considered as a dynamic analysis?
Concept: Liquidity Ratios
A company had Current Assets of ₹ 3,00,000 and Current Liabilities of ₹ 1,50 000, having a Current Ratio of 2:1. What will be the company's revised Current Ratio after it collects ₹ 20,000 cash from its debtors of ₹ 25,000, the remaining debtors being bad?
Concept: Liquidity Ratios
State with reason whether Provision for Doubtful Debts is subtracted from Trade Receivables while computing Current Ratio.
Concept: Liquidity Ratios
Calculate Debt to Total Assets Ratio of Moonlight Ltd. (up-to two decimal places) from the following information:
| Particulars | (₹) |
| Property, Plant & Equipment and Intangible Assets | 20,00,000 |
| Shares of XYZ Bank Ltd. | 1,00,000 |
| Long-term Loans and Advances | 1,00,000 |
| Current Assets | 10,00,000 |
| Current Liabilities | 4,00,000 |
| Total Debt | 12,00,000 |
Concept: Liquidity Ratios
Calculate Quick Ratio (up-to two decimal places) from the following information:
| Particulars | (₹) |
| Total Current Assets | 90,000 |
| Working Capital | 60,000 |
| Prepaid Expenses | 30,000 |
Concept: Liquidity Ratios
What is the difference between Total Assets and Current Liabilities?
Concept: Liquidity Ratios
A company has a Quick Ratio of 1.8 : 1. Mention whether this ratio will improve/reduce/not change after it sells a machine worth ₹ 1,20,000 at a loss of ₹ 30,000.
Concept: Liquidity Ratios
Calculate the Current Ratio (up-to two decimal places) of Windlas Biotech Ltd. from the following extract of its Annual Report of 2021-22.
| Particulars | (₹) (in millions) |
| Opening Inventory of consumables (raw materials) | 264.79 |
| Closing Inventory of consumables (raw materials) | 389.85 |
| Opening Inventory of finished goods and work-in-progress | 149.82 |
| Closing Inventory of finished goods and work-in-progress | 197.24 |
| Current Assets (other than inventory of consumables and of finished goods and work-in-progress) | 3,229.23 |
| Current Liabilities | 936.52 |
Concept: Liquidity Ratios
A company had Current Assets of ₹ 3,00,000 and Current Liabilities of ₹ 1,50,000, having a current Ratio of 2 : 1. What will be its revised Current Ratio after it endorses a bills receivable of ₹ 40,000 to one of its creditors?
Concept: Liquidity Ratios
