Advertisements
Advertisements
Question
Which of the following transactions will result in the flow of cash?
Options
Cash was withdrawn from bank Rs 71,000.
An issue of 9% debentures of Rs 1,00,000 to the vendors of machinery.
Received from debtors Rs 74,000.
Redeemed 10% debentures by converting the same into equity shares.
Solution
Received from debtors Rs 74,000.
Explanation:
The amount received from debtors, Rs 74,000, is the only transaction that results in the flow (inflow) of cash into the business as it would be received in cash. Deposits of cash into a bank and withdrawals of cash from a bank are just the cash management activities of the business. Conversion of debentures into equity shares represents the change in capital structure of the company.
APPEARS IN
RELATED QUESTIONS
'Interest received and paid' is considered as which type of activity by a finance company while preparing a Cash Flow Statement?
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 'Cash Flow' while preparing Cash Flow Statement?
You are required to prepare a Cash-Flow Statement (as per AS-3)
for the year 2016-17 from the following Balance Sheet.
Balance Sheet of Honesty Ltd.
As at 31st March, 2016 and 31st March, 2017
| I | Particulars | Note No. | 31.03.2017 |
31.03.2017 |
| 1. |
EQUITY AND LIABILITIES |
1. |
14,00,000 5,00,000
|
10,00,000 4,00,000
|
| 2. | Non-Current Liabilities Long Term Borrowing (10% Debentures) |
5,00,000 | 1,40,000 | |
| 3. | Current Liabilities (a) Short Term Borrowings (Bank Overdraft) (b) Trade Payables (Creditors) (c) Short Term Provisions |
20,000 1,00,000 60,000 |
30,000 60,000 30,000 |
|
| TOTAL | 25,80,000 | 16,60,000 | ||
| II 1. | ASSETS Non-Current Assets Fixed Assets (i) Tangible (ii) Intangible (Goodwill) |
2. |
16,00,000 1,40,000 |
9,00,000 2,00,000 |
| 2. | Current Assets (a) Inventories (b) Trade Receivables (c) Cash and Bank Balances (Cash at Bank) |
2,50,000 5,00,000 90,000 |
2,00,000 3,00,000 60,000 |
|
| TOTAL | 25,80,000 | 16,60,000 |
Notes to Accounts:
| Particulars | 31.03.2017 | 31.03.2016 |
| 1. Short term provisions provision for taxation |
60,000 | 30,000 |
| 2. Fixed Assets (Tangible) Plant and Machinery Less Accumulated Depreciation |
17,60,000 (1,60,000) |
10,00,000 (1,00,000) |
| 16,00,000 | 9,00,000 |
During the year 2016-17:
(i) A part of the machine, costing Rs. 50,000, accumulated depreciation thereon being Rs. 20,000, was sold for
Rs.18,000.
(ii) Tax paid Rs. 20,000.
(iii) Interest of Rs. 50,000 paid on Debentures.
Short Answer Question
What are the objectives of preparing cash flow statement?
Short Answer Question
“The nature/type of enterprise can change altogether the category into which a particular activity may be classified.” Do you agree? Illustrate your answer.
Long Answer Question
Describe the procedure to prepare Cash Flow Statement.
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 | |||
|
1. Shareholders’ Funds |
|||
|
a) Equity share capital |
3,00,000 | 2,00,000 | |
|
b) Reserves and surplus |
2,00,000 | 1,60,000 | |
|
2. Non-current liabilities |
|||
|
a) Long-term borrowings |
1 | 80,000 | 1,00,000 |
|
3. Current liabilities |
|||
|
Trade payables |
1,20,000 | 1,40,000 | |
|
Short-term provisions |
2 | 70,000 | 60,000 |
| Total | 7,70,000 | 6,60,000 | |
| II) Assets | |||
|
1. Non-current assets |
|||
|
Fixed assets |
3 | 5,00,000 | 3,20,000 |
|
2. Current assets |
|||
|
a) Inventories |
1,50,000 | 1,30,000 | |
|
b) Trade receivables |
4 | 90,000 | 1,20,000 |
|
c) Cash and cash equivalents |
5 | 30,000 | 90,000 |
| Total | 7,70,000 | 6,60,000 |
Notes to accounts:
|
|
2017 | 2016 |
| 1. Long-term borrowings | ||
|
Bank Loan |
80,000 | 1,00,000 |
| 2. Short-term provision | ||
|
Proposed dividend |
70,000 | 60,000 |
| 3. Fixed assets | 6,00,000 | 4,00,000 |
|
Less: Accumulated Depreciation |
1,00,000 | 80,000 |
|
(Net) Fixed Assets |
5,00,000 | 3,20,000 |
| 4. Trade receivables | ||
|
Debtors |
60,000 | 1,00,000 |
|
Bills receivables |
30,000 | 20,000 |
|
|
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.
Name the activities that constitute the primary or main activities of an enterprise?
Which one is Cash Inflows from Financing activities?
Which of the following transactions will not result into flow of cash?
Statement of cash flows includes:
Which of the following shall be considered as an outflow of cash in the Cash Flow Statement?
Which of the following is not an investing cash flow?
Interest collected by an automobile company selling a car on an instalment basis will be classified as:
Maturity period for a Short-term Investment from the date of its purchase to be considered as cash equivalents should be:
From the following Balance Sheets of Ronald Ltd., you are required to prepare a Cash Flow Statement (as per AS 3) for the year 2023-24.
| Balance Sheets of Ronald Ltd. As at 31st March, 2024 and 31st March, 2023 |
|||
| Particulars | Note No. | 31.03.2024 (₹) | 31.03.2023 (₹) |
| I. EQUITY AND LIABILITIES | |||
| 1. Shareholder's Funds | |||
| (a) Share Capital | 6,00,000 | 6,00,000 | |
| (b) Reserves and Surplus (Statement of P & L) | 80,000 | (60,000) | |
| 2. Non-Current Liabilities | |||
| Long Term Borrowings | 1,00,000 | 1,50,000 | |
| 3. Current Liabilities | |||
| (a) Short-term borrowings (Bank overdraft) | 1,75,000 | 22,000 | |
| (b) Short Term Provisions (Provision for Tax) | 15,000 | 28,000 | |
| Total | 9,70,000 | 7,40,000 | |
| II. ASSETS | |||
| 1. Non-Current Assets | |||
| (a) Property, Plant & Equipment & Intangible Assets | |||
| (i) Property, Plant & Equipment (Plant & Machinery) | 5,50,000 | 6,40,000 | |
| (b) Non- Current Investments (7% Debentures of Violet Ltd.) | 1,40,000 | 50,000 | |
| 2. Current Assets | |||
| Cash & Bank Balance (Bank) | 2,80,000 | 50,000 | |
| Total | 9,70,000 | 7,40,000 | |
Additional information:
- The Debentures of Violet Ltd. were purchased on 31st March, 2024.
- During the year 2023-24:
- Tax of ₹ 20,000 was paid.
- Interest on all borrowings due and paid was ₹ 25,000.
