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Question
State the objective preparing ‘Cash Flow Statement’.
Solution
A cash flow statement is prepared to ascertain the gross inflows and outflows of cash and cash
equivalents from various business activities.
RELATED QUESTIONS
Following was the Balance Sheet of M.M Ltd at on 31.3.2015.
M.M. Ltd Balance Sheet as at 31-3-2015
| Particulars | Note No. | 31-3-2015 (Rs.) | 31-3-2014 (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 |
5,00,000 2,00,000
4,50,000
1,50,000 70,000 |
4,00,000 (50,000)
5,00,000
50,000 90,000 |
| Total | 13,70,000 | 9,90,000 | |
|
II. Assets 1. Non – Current Assets a) Fixed Assets Tangible assets Intangible assets b) Non – Current Investments 2. Current Assets a) Current Investments b) Inventories c) Cash and Cash Equivalents |
5 6
7
|
10,03,000 20,000 1,00,000
50,000 1,07,000 90,000 |
7,20,000 30,000 75,000
60,000 45,000 60,000 |
| Total | 13,70,000 | 9,90,000 |
| 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) |
2,00,000 |
(50,000) |
| 2,00,000 | (50,000) | ||
|
2.
|
Long term borrowings : 12 % Debentures |
4,50,000 |
5,00,000 |
| 4,50,000 | 5,00,000 | ||
|
3.
|
Short – term borrowings : Bank Overdraft |
1,50,000 |
50,000 |
| 1,50,000 | 50,000 | ||
|
4.
|
Short – term provisions Provisions for tax |
70,000 |
90,000 |
| 70,000 | 90,000 | ||
|
5.
|
Tangible Assets Machinery Accumulated Depreciation |
12,03,000 (2,00,000) |
8,21,000 (1,01,000) |
| 10,03,000 | 7,20,000 | ||
|
6.
|
Intangible Assets Goodwill |
20,000 |
30,000 |
| 20,000 | 30,000 | ||
|
7.
|
Inventories Stock in trade |
1,07,000 |
45,000 |
| 1,07,000 | 45,000 |
Additional Information
(i) 12% Debentures were redeemed on 31-3-2015
(ii) Tax Rs. 70,000 was paid during the year
Prepare Cash flow Statement.
Why is separate disclosure of cash flows from investing activities important? State.
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?
From the following Balance Sheets of Sonam Ltd as on 31-3-2012 and 31-3-2011.
Prepare a Cash Flow Statements:
|
Liabilities |
31-3-2011 Rs |
31-3-2011 Rs |
Assets |
31-3-2011 Rs |
31-3-2011 Rs |
|
Equity Shares Capital Profit and Loss Account Bank Loan Proposed Dividend Provision for tax Creditors |
1,00,000
25,000
50,000 20,000
10,000 15,000
|
1,50,000
50,000
25,000 15,000
17,500 11,250 |
Patents Building Investment Debtors Stock Cash
|
12,500 1,50,000 - 50,000 2,500 5,000 |
11,250 1,50,000 18,750 3,750 21,250 |
|
|
|
||||
|
2,20,000 |
2,68,750 |
|
2,20,000 |
2,68,750 |
|
|
|
|
|
|
Additional Information:
During the year a Building having book value Rs 50,000 was sold at a loss of Rs 2,000 and deprecation charged on Building was Rs 4,000
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.
From the following Balance Sheets of Tiger Super Steel Ltd., prepare Cash Flow Statement:
Balance Sheet of Tiger Super Steel Ltd.
as at 31st March 2014 and 31st March 2017
| Particulars | Note No. | March 31, 2017 (Rs) |
March 31, 2016 (Rs) |
| I) Equity and Liabilities | |||
|
1. Shareholders’ Funds |
|||
|
a) Share capital |
1 | 1,40,000 | 1,20,000 |
|
b) Reserves and surplus |
2 | 22,800 | 15,200 |
|
2. Current Liabilities |
|||
|
a) Trade payables |
3 | 21,200 | 14,000 |
|
b) Other current liabilities |
4 | 2,400 | 3,200 |
|
c) Short-term provisions |
5 | 28,400 | 22,400 |
| Total | 2,14,800 | 1,74,800 | |
| II) Assets | |||
|
1. Non-Current Assets |
|||
|
a) Fixed assets |
|||
|
i) Tangible assets |
6 | 96,400 | 76,000 |
|
ii) Intangible assets |
18,800 | 24,000 | |
|
b) Non-current investments |
14,000 | 4,000 | |
|
2. Current Assets |
|||
|
a) Inventories |
31,200 | 34,000 | |
|
b) Trade receivables |
43,200 | 30,000 | |
|
c) Cash and Cash Equivalents |
11,200 | 6,800 | |
| Total | 2,14,800 | 1,74,800 |
Notes to accounts:
|
2017 |
2016 |
|
|
1. Share Capital |
||
|
Equity share capital |
1,20,000 |
80,000 |
|
10% Preference share capital |
20,000 |
40,000 |
|
1,40,000 |
1,20,000 |
|
|
2. Reserves and surplus |
||
|
General reserve |
12,000 |
8,000 |
|
Balance in statement of profit and loss |
10,800 |
7,200 |
|
22,800 |
15,200 |
|
|
3. Trade payables |
||
|
Bills payable |
21,200 |
14,000 |
|
4. Other current liabilities |
||
|
Outstanding expenses |
2,400 |
3,200 |
|
5. Short-term provisions |
||
|
Provision for taxation |
12,800 |
11,200 |
|
Proposed dividend |
15,600 |
11,200 |
|
28,400 |
22,400 |
|
|
6. Tangible assets |
||
|
Land and building |
20,000 |
40,000 |
|
Plant |
76,400 |
36,000 |
|
96,400 |
76,000 |
Additional Information:
Depreciation Charge on Land & Building Rs 20,000, and Plant Rs 10,000 during the year.
Which one is Cash Outflows from operating activities?
Classify the following activity into operating activities, investing activities, financing activities or cash activities ·
"Proceeds from long-term borrowings."
Classify the following activity into operating activities, investing activities, financing activities or cash activities
"Cash credit"
What is the primary objective of cash flow statement?
As per which accounting standard, cash flows exclude movements between items that constitute cash or cash equivalents?
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?
Dividend received by other than financial enterprise is shown in cash flow statement under ______.
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
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.
