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Question
State the meaning of ‘Cash Flow’ while preparing Cash Flow Statement.
Solution
The movement of cash in and out of the business is referred as cash flow in a business. Cash flows can be either inflows or outflows of cash and cash equivalents.
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RELATED QUESTIONS
State the primary objective of preparing a Cash Flow Statement.
State whether the following will increase, decrease or have no effect on cash flow from operating activities while preparing 'Cash Flow Statement':
1) A decrease in outstanding employees benefits expenses by Rs 3,000
2) Increase in prepaid insurance by Rs 2,000
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.
While preparing Cash Flow Statement, the accountant of a financing company showed 'Dividend Received Rs 50,000 on investments' as an investing activity. Was he correct in doing so? Give reason.
Which of the following transactions will result in the flow of cash?
Following is the Balance Sheets of Wind Power Ltd as at 31.3.2014:
| Wind Power Ltd Balance Sheet as at 31.3.2014 |
|||
| Particulars | Note No |
2013-14 Rs |
2012-13 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. Trade Payables b. Short-Term Provisions |
1
|
48,00,000 12,00,000
9,60,000
7,16,000 2,00,000 |
44,00,000 8,00,000
6,80,000
8,16,000 3,08,000 |
| Total | 78,76,000 | 70,04,000 | |
|
II. Assets a) Fixed Assets (i) Tangible assets (ii) Intangible b) Non – Current Investments 2. Current Assets a) Current Investments b) Inventories c) Trade Receivables d)Cash and Cash Equivalents |
2 3
|
42,80,000 1,60,000
9,60,000 5,16,000 6,80,000 12,80,000 |
34,00,000 4,80,000
4,48,000 4,84,000 5,72,000 16,20,000 |
| Total | 78,76,000 | 70,04,000 | |
Notes to Accounts
| Note No |
Particulars | As On 31-3-2014 |
As On 31-3-2013 |
| 1 |
Reserve and Surplus |
12,00,000 |
8,00,000 |
|
2
|
Tangible Assets Machinery Less: Accumulated Depreciation |
50,80,000 (8,00,000) |
40,00,000 (6,00,000) |
|
3
|
Intangible Assets Goodwill |
1,60,000 |
4,80,000 |
Additional information
During the year a piece of machinery, costing Rs 96,000 on which accumulated depreciation was Rs 64,000 was sold for Rs 24,000.
Prepare Cash Flow Statement
State the objective preparing ‘Cash Flow Statement’.
Prepare a Cash Flow Statement from the information given in the balance sheet of Simco Ltd. As at 31-3- 2013and 31-3-2012:
| Particulars | Note No. |
31-3-2013 Rs |
31-3-2012 Rs |
|
I. Equity and Liabilities 1. Shareholders' Funds a. Equity Share Capital b. Reserves and Surplus 2. Non-current Liabilities a. Long term-borrowing 3. Current liabilities a. Trade Payables |
2,00,000 90,000
87,500
10,000 |
1,50,000 75,000
87,500
76,000 |
|
| Total | 3,87,500 | 3,87,500 | |
|
II. Assets 1. Non- Current assets a. Fixed assets i. Tangible assets b. Non –Current Investment 2. Current assets a. Current-Investment (marketable) b. Inventory c. Trade receivable d. Cash and Cash equivalents |
1,87,500 1,05,000
12,500 4,000 9,500 68,500 |
1,40,000 1,02,500
33,500 5,500 23,000 84,000 |
|
| Total | 3,87,500 | 3,88,500 |
Notes to Account:
Note -1
| Particulars |
2013 Rs |
2012 Rs |
| Reserve and Surplus | ||
| Surplus( balance in the statement of profit and loss) | 90,000 | 75,000 |
Give the meaning of ‘Cash Flow’.
Long Answer Question
Explain the major Cash Inflows and outflows from financing activities.
Following are the extracts from the Balance Sheet of MAH Ltd. as at 31st March, 2019
|
Particular |
31st March 2019 (₹) |
31st March 2018 (₹) |
| Surplus, i.e., Balance in Statement of Profit and Loss |
10,00,000 |
5,00,000 |
| Dividend Payable |
50,000 |
– |
Additional Information: Proposed Dividend for the years ended 31st March, 2018 and 2019 are ₹ 4,00,000 and ₹ 5,00,000 respectively.
Prepare the Note to show Net Profit before Tax and Extraordinary Items.
"______ implies movement of cash in and out of non-cash items. Receipt of cash from a non-cash item is termed as cash inflow while cash payment in respect of such items as cash outflow"
Classify the following activity into operating activities, investing activities, financing activities or cash activities.
"Cash receipt from debtors"
Classify the following activity into operating activities, investing activities, financing activities or cash activities
"Purchase of machinery"
Balance Sheet (Extract)
| Liabilities | 30-03-2018 (₹) | 31-03-2017 (₹) |
| Fixed Assets | 23,80,000 | 17,50,000 |
Depreciation on fixed assets was ₹ 2,00,000 for the year. How much amount for 'Purchase of fixed assets' will be shown in investing activity for cash flow statement prepared on 31st March, 2018?
Which of the following is not an investing cash flow?
Cash flow example from an operating activity is ______.
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.
