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Question
Anand Ltd., arrived at a net income of Rs 5,00,000 for the year ended March 31, 2017. Depreciation for the year was Rs 2,00,000. There was a profit of Rs 50,000 on assets sold which was transferred to Statement of profit and Loss account. Trade Receivables increased during the year Rs 40,000 and Trade Payables also increased by Rs 60,000. Compute the cash flow operating activities by the indirect approach.
Solution
Cash Flow from Operating Activities as on March 31, 2017
|
Particulars |
Amount (₹) |
Amount (₹) |
|
|
Net Profit during the year |
|
5,00,000 |
|
|
Items to be adjusted: |
|
|
|
|
|
Add: Depreciation |
2,00,000 |
|
|
|
Less: Gain on sale of assets |
(50,000) |
1,50,000 |
|
Operating Profit before Working Capital changes |
|
6,50,000 |
|
|
|
Add: Increase in Trade Payables |
60,000 |
|
|
|
Less: Increase in Trade Receivables |
(40,000) |
20,000 |
|
Net Cash from Operations |
|
6,70,000 |
|
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'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'.
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| Balance Sheet of Tiger Super Steel Ltd |
|||
| Particulars | Note No. | 31-3-2015 (Rs.) | 31-3-2014 (Rs.) |
|
I. Equity and Liabilities 1. Shareholder’s Funds a. Equity Share Capital b. Reserve and Surplus 2. Non - Current Liabilities a) Long term borrowings 3. Current Liabilities a) Trade Payables |
1 |
2,10,000 1,32,000
1,50,000
75,000 |
1,80,000 24,000
1,50,000
27,000 |
| Total | 5,67,000 | 3,81,000 | |
|
II. Assets 1. Non – Current Assets a) Fixed Assets Tangible assets b) Non – Current Investments 2. Current Assets a) Current Investments (marketable) b) Inventories c) Trade Receivable c) Cash and Cash equivalents |
2,94,000 48,000
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2,52,000 18,000
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|
| Total | 5,67,000 | 3,81,000 | |
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Notes to Account: Note -1 |
||
| Particulars | 2013 (Rs.) | 2012 (Rs.) |
|
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1,32,000 |
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March 31, 2017 (Rs) |
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