Advertisements
Advertisements
Question
State any two advantages of preparing cash flow statement.
Solution
Advantages of Preparing Cash Flow Statement
1. Short-term Financial Planning- This statement is very advantageous for short-term financial planning. It helps in assessing and forecasting the sources and utilisation of cash and cash equivalents during a particular period.
2. Reasons for Change in Cash Position- It is possible that sometimes a company may have surplus cash even in case of lower profits or deficiency of cash in spite of higher profits. In such a situation, Cash Flow Statement helps in analysing the reason for the such change in the balances of cash and cash equivalents.
APPEARS IN
RELATED QUESTIONS
Following is the Balance Sheet of SN Ltd as at 31-3-2015:
S.N Ltd Balance Sheet as at 31-3-2015
| Particulars | Note No. | 31-03-2015 (Rs.) | 31-03-2014 (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 |
2,50,000 1,00,000
2,25,000
75,000 35,000 |
2,00,000 (25,000)
2,50,000
25,000 45,000 |
| Total | 6,85,000 | 4,95,000 | |
|
II. Assets 1. Non – Current Assets a) Fixed Assets Tangible assets Intangible b) Non – Current Investments 2. Current Assets a) Current Investments b) Inventories c) Cash and Cash Equivalents |
5 6
7
|
5,01,500 10,000 50,000
25,000 53,500 45,000 |
3,60,000 15,000 37,500
30,000 22,500 30,000 |
| Total | 6,85,000 | 4,95,000 |
| 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) |
1,00,000 |
(25,000) |
| 1,00,000 | (25,000) | ||
|
2.
|
Long term borrowings : 12 % Debentures |
2,25,000 |
2,50,000 |
| 2,25,000 | 2,50,000 | ||
|
3.
|
Short – term borrowings : Bank Overdraft |
75,000 |
25,000 |
| 75,000 | 25,000 | ||
|
4.
|
Short – term provisions Provisions for tax |
35,000 |
45,000 |
| 35,000 | 45,000 | ||
|
5.
|
Tangible Assets Machinery Accumulated Depreciation |
6,01,500 (1,00,000) |
4,10,500 (50,500) |
| 5,01,500 | 3,60,000 | ||
|
6.
|
Intangible Assets Goodwill |
10,000 |
15,000 |
| 10,000 | 15,000 | ||
|
7.
|
Inventories Stock in trade |
53,500 |
22,500 |
| 53,500 | 22,500 |
Additional Information
(i) 12% Debentures were redeemed on 31-3-2015
(ii) Tax Rs.35,000 was paid during the year
Prepare Cash flow Statement
Give the meaning of 'Cash Flow statement'.
Prepare a Cash Flow Statement from the information given in the balance sheet of live Ltd. as at 31-3-2013and 31-3-2012:
| 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
54,000 1,07,000 40,000 24,000 |
2,52,000 18,000
60,000 24,000 17,500 9,500 |
|
| Total | 5,67,000 | 3,81,000 | |
|
Notes to Account: Note -1 |
||
| Particulars | 2013 (Rs.) | 2012 (Rs.) |
|
Reserve and Surplus Surplus (balance in statement of profit and loss) |
1,32,000 |
24,000 |
From the following Balance Sheet of JY Ltd. as at 31st March 2017, prepare a Cash Flow Statement :
| Balance Sheet of JY Ltd. as at 31.3.2017 |
|||
| Particular | Note No. |
31-3-2017 Rs |
31-3-2016 Rs |
|
I. Equity and Liabilities 1. Shareholders' Funds: (a) Share capital (b) Reserves and surplus 2. Non-current Liabilities: Long term-borrowing 3. Current Liabilities: (a) Short-term borrowings (b) Short-term provisions |
1
2
3 4 |
5,00,000 1,00,000
2,50,000
1,50,000 2,00,000 |
5,00,000 (25,000)
1,50,000
1,00,000 1,25,000 |
| Total | 12,00,000 | 8,50,000 | |
|
II. Assets 1. Non- Current Assets: (a) Fixed Assets: (i) Tangible 2. Current Assets: (a) Trade Receivable (b) Cash and Cash Equivalents (c) Short-term Loans and Advances |
5
|
6,00,000
2,75,000 1,25,000 2,00,000 |
4,50,000
2,25,000 75,000 1,00,000 |
| Total | 12,00,000 | 8,50,000 | |
Notes to Accounts
| Note No | Particulars |
31-3-2017 Rs |
31-3-2016 Rs |
|
1
2
3
4
5
|
Reserve and Surplus (Surplus i.e. Balance in Statement of Profit and Loss)
|
1,00,000 |
(25,000) |
| 1,00,000 | (25,000) | ||
|
Long-term borrowings : 10 % Debentures
|
2,50,000 |
1,50,000 |
|
| 2,50,000 | 1,50,000 | ||
|
Short-term borrowings : Bank Overdraft
|
1,50,000 |
1,00,000 |
|
| 1,50,000 | 1,00,000 | ||
|
Short-term provisions: (i) Proposed Dividend (ii) Provision for Tax
|
75,000 1,25,000 |
50,000 75,000 |
|
| 2,00,000 | 1,25,000 | ||
|
Tangible Assets: Machinery Accumulated Depreciation
|
7,37,500 (1,37,500) |
5,25,000 (75,000) |
|
| 6,00,000 | 4,50,000 |
Additional Information:
Rs 1,00,000, 10% Debentures were issued on 31-3-2017.
Will 'acquisition of machinery by an issue of equity shares' be considered while preparing 'Cash Flow Statement'? 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.
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.
When does the flow of cash take place'?
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.
Short Answer Question
What is a Cash Flow Statement?
The following is the Profit and Loss Account of Yamuna Limited:
|
Statement of Profit and Loss of Yamuna Ltd., for the Year ended March 31, 2017 |
|||
| Particulars | Note No. | Amount (₹) | |
| i) | Revenue from Operations | 10,00,000 | |
| ii) | Expenses | ||
|
|
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.
Classify the following activity into operating activities, investing activities, financing activities or cash activities
"Proceeds from sales of old machinery"
As per which accounting standard, cash flows exclude movements between items that constitute cash or cash equivalents?
Which of the following transactions will not result into flow of cash?
Which item comes under Financial Activities in the Cash Flow statement?
From the following information, find out Cash Outflow from Financing Activities.
| Year I | Year II | |
| Proposed Dividend | ₹ 1,20,000 | ₹ 1,50,000 |
| 12% debentures | ₹ 4,00,000 | ₹ 5,00,000 |
Additional Information:
Additional Debentures were issued at the end of the year.
Interim Dividend paid ₹ 50,000
Preference Share Capital Issued ₹ 2,00,000
Gain on sale of tangible current assets is a/an:
Interest collected by an automobile company selling a car on an instalment basis will be classified as:
State whether the following transaction will result in inflow, outflow or no flow of cash while preparing cash flow statement:
Interest received in cash from loans and advances ₹ 80,000.
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.
