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Question
Give the meaning of ‘Cash Flow’.
Solution
Cash flows are inflows and outflows of cash and cash equivalents. A cash inflow results in increase in the total cash balance and a cash outflow results in decrease in the total cash balance.
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RELATED QUESTIONS
State the objective of preparing ‘Cash Flow statement’.
Does movement between items that constitute cash or cash equivalents result into cash flow? Give reason in support of your answer.
Will 'Net decrease in working capital' other than cash and cash equivalents, increase, decrease or not change Cash Flow from Operating Activities? Give reason in support of your answer.
State with reason whether the following transactions will increase, decrease or not change the 'Return on Investment':
(i) Purchase of machinery worth Rs 2,00,000 by issue of equity shares.
(ii) Charging depreciation of Rs 5,000 on machinery.
(iii) Redemption of debentures in cash Rs 70,000.
(iv) Converting Rs 50,000, 9% debentures into equity shares.
What is meant by a non-cash transaction? Give one example of a non-cash transaction.
State the purpose of preparing a ‘Cash Flow Statement’.
While preparing Cash Flow Statements, What type of activity is ‘Payments of cash to aquire shares of another company by a trading company’.
From the following Balance Sheets of B.C.R. Ltd as on 31-3-2010 and 31-3-2011.
Prepare a Cash Flow Statements:
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Balance Sheets of B.C.R. Ltd. as on 31.3.2010 and 31.3.2011 |
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Liabilities |
31-3-2010 Rs |
31-3-2011 Rs |
Assets |
31-3-2010 Rs |
31-3-2011 Rs |
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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 |
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9,35,000 |
12,72,000 |
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9,35,000 |
12,72,000 |
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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.
Redemption of debentures would result in inflow, outflow on no flow of cash? Give your answer with reason.
The following is the Profit and Loss Account of Yamuna Limited:
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Statement of Profit and Loss of Yamuna Ltd., for the Year ended March 31, 2017 |
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| Particulars | Note No. | Amount (₹) | |
| i) | Revenue from Operations | 10,00,000 | |
| ii) | Expenses | ||
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Cost of Materials Consumed | 1 | 50,000 |
| Purchase of Stock-in-trade | 5,00,000 | ||
| Other Expenses | 2 | 3,00,000 | |
| Total Expenses | 8,50,000 | ||
| iii) | Profit before Tax (i – ii) | 1,50,000 | |
Additional information:
- Trade receivables decrease by Rs 30,000 during the year.
- Prepaid expenses increase by Rs 5,000 during the year.
- Trade payables increase by Rs 15,000 during the year.
- Outstanding expenses payable increased by Rs 3,000 during the year.
- Other expenses included a depreciation of Rs 25,000.
Compute net cash from operations for the year ended March 31, 2017 by the indirect method.
From the following Balance Sheet of Mohan Ltd., prepare cash flow Statement:
Balance Sheet of Mohan Ltd.,
as at 31st March 2016 and 31 March 2017
| Particulars | Note No. | March 31, 2017 (Rs) |
March 31, 2016 (Rs) |
| I) Equity and Liabilities | |||
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1. Shareholders’ Funds |
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a) Equity share capital |
3,00,000 | 2,00,000 | |
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b) Reserves and surplus |
2,00,000 | 1,60,000 | |
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2. Non-current liabilities |
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a) Long-term borrowings |
1 | 80,000 | 1,00,000 |
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3. Current liabilities |
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Trade payables |
1,20,000 | 1,40,000 | |
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Short-term provisions |
2 | 70,000 | 60,000 |
| Total | 7,70,000 | 6,60,000 | |
| II) Assets | |||
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1. Non-current assets |
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Fixed assets |
3 | 5,00,000 | 3,20,000 |
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2. Current assets |
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a) Inventories |
1,50,000 | 1,30,000 | |
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b) Trade receivables |
4 | 90,000 | 1,20,000 |
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c) Cash and cash equivalents |
5 | 30,000 | 90,000 |
| Total | 7,70,000 | 6,60,000 |
Notes to accounts:
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2017 | 2016 |
| 1. Long-term borrowings | ||
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Bank Loan |
80,000 | 1,00,000 |
| 2. Short-term provision | ||
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Proposed dividend |
70,000 | 60,000 |
| 3. Fixed assets | 6,00,000 | 4,00,000 |
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Less: Accumulated Depreciation |
1,00,000 | 80,000 |
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(Net) Fixed Assets |
5,00,000 | 3,20,000 |
| 4. Trade receivables | ||
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Debtors |
60,000 | 1,00,000 |
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Bills receivables |
30,000 | 20,000 |
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90,000 | 1,20,000 |
| 5. Cash and cash equivalents Bank | 30,000 | 90,000 |
Additional Information:
Machine Costing Rs. 80,000 on which accumulated depreciation was Rs. 50,000 was sold for Rs. 20,000.
Answer the following question:
State giving reason, whether the issue of shares for consideration other than cash will result into inflow, outflow or no flow of cash.
Which one is Cash Inflows from investing activities?
Which one is Cash Inflows from Financing activities?
Classify the following activity into operating activities, investing activities, financing activities or cash activities
"Proceeds from sales of old machinery"
Classify the following activity into operating activities, investing activities, financing activities or cash activities ·
"Proceeds from long-term borrowings."
Which of the following is not a cash outflow?
Dividend received by other than financial enterprise is shown in cash flow statement under ______.
