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प्रश्न
While preparing 'Cash Flow Statement', the accountant of 'Jain Limited', a financing company, showed dividend received on investments as investing activity. Was he correct in doing so? Give reason.
उत्तर
The accountant of 'Jain Limited' was not correct in recording dividend received on investments as cash flow from investing activity. 'Jain Limited' is a financing company, so the receipt of dividend should be regarded as the cash inflow from operating activities.
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संबंधित प्रश्न
'An enterprise may hold securities and loans for dealing or trading purposes in which case they are similar to inventory acquired specifically for resale.' Is the statement true? Cash flows from such activities will be classified under which type of activity while preparing 'Cash flow statement'.
Give the meaning of 'Cash Flow statement'.
Does movement between items that constitute cash or cash equivalents result into cash flow? Give reason in support of your answer.
Why is separate disclosure of cash flows from investing activities important? State.
'Interest received and paid' is considered as which type of activity by a finance company while preparing a Cash Flow Statement?
Under which type of activity will you classify' Dividend received by a financial company' while preparing Cash Flow Statement?
Following is the Balance Sheet of Wisben Ltd. As on 31st March 2012
| Balance Sheet of Tiger Super Steel Ltd. | |||
| Particulars | Note No. |
2012 Rs |
2011 Rs |
|
I. Equity and Liabilities 1. Shareholders' Funds a. Share Capital b. Reserves and Surplus (Profit & Loss Balance) 2. Non-Current Liabilities a. Long Term-Borrowing 3. Current Liabilities a. Trade Payables |
7,00,000 2,00,000
3,00,000
30,000 |
6,00,000 1,10,000
2,00,000
25,000 |
|
| Total | 12,30,000 | 9,35,000 | |
|
II. Assets 1. Non- Current assets a. Fixed assets i. Tangible assets b. Non –Current Investment 2. Current assets a. Inventory b. Trade Receivable c. Cash and Cash Equivalents |
11,00,000
70,000 32,000 28,000 |
8,00,000
60,000 40,000 35,000 |
|
| Total | 12,30,000 | 9,35,000 | |
Adjustments:
During the year a piece of machinery of the book value of Rs 80,000 was sold for Rs 65,000. Depreciation provided on tangible assets during the year amounted to Rs 2,00,000.
Prepare a Cash Flow Statement.
State any two benefits of preparing 'Cash Flow Statement'.
While preparing Cash Flow Statements what type of activity is, ‘Payments of Cash to acquire Debentures by an investment company?
‘Payment of dividend’ will come under which type of activity while preparing a Cash Flow Statement?
What is the object of preparing a Cash Flow Statements?
The important objectives for preparing Cash Flow Statement are as follows.
- It helps to ascertain the gross inflows and outflows of cash and cash equivalents from various activities.
- Secondly, Cash Flow Statement helps in analysing various reasons responsible for change in the cash balances during an accounting year.
From the following Balance Sheets of B.C.R. Ltd as on 31-3-2010 and 31-3-2011.
Prepare a Cash Flow Statements:
|
Balance Sheets of B.C.R. Ltd. as on 31.3.2010 and 31.3.2011 |
|||||
|
Liabilities |
31-3-2010 Rs |
31-3-2011 Rs |
Assets |
31-3-2010 Rs |
31-3-2011 Rs |
|
Equity Shares Capital Profit and Loss Account Bank Loan Proposed Dividend Provision for tax Creditors |
5,00,000
2,00,000
1,00,000 50,000 30,000 55,000 |
7,00,000
3,50,000
50,000 70,000 50,000 52,000 |
Patents Equipment Investment Debtors Stock Bank |
1,00,000 5,00,000 – 80,000 55,000 2,00,000 |
95,000 5,00,000 1,00,000 1,30,000 3,00,000 |
|
|
|
||||
|
9,35,000 |
12,72,000 |
|
9,35,000 |
12,72,000 |
|
|
|
|
|
|||
Additional Information:
During the year Equipment costing Rs 1,00,000 was purchases. Loss on sale of Equipment amounted to Rs 12,000. Rs 18,000 deprecation charged on Equipment.
Short Answer Question
State clearly what would constitute the operating activities for each of the follow in the following of enterprises:
(i) Hotel
(ii) Film production house
(iii) Financial enterprise
(iv) Media enterprise
(v) Steel manufacturing unit
(vi) Software development business unit.
Long Answer Question
Describe"Indirect" method of ascertaining Cash Flow from Operating Activities.
Following is the Financial Statement of Garima Ltd., prepare cash flow statement.
| Particulars | Note No. | 31st March 2017 (Rs) |
31st March 2016 (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 2017 (Rs) |
31st March 2016 (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:
- Depreciation charged during the year Rs 32,000.
Classify the following activity into operating activities, investing activities, financing activities or cash activities.
"Cash Sales"
What is the primary objective of cash flow statement?
Tax paid on dividend should be classified as which type of activity along with dividend paid.
Which of the following is not a cash outflow?
