Advertisements
Advertisements
Question
While preparing Cash Flow Statement, the accountant of 'Rachana Ltd.', a financing company, included 'Interest received on loan' in financing activities. Was the correct in doing so? Give reason.
Solution
The accountant was wrong in his approach of showing 'Interest received on Loan' under 'Financing Activity'. Interest received on loan by a financing company is cash inflow from operating activities. So it is to be categorised under 'Cash Flow from Operating Activities'.
APPEARS IN
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.
Does movement between items that constitute cash or cash equivalents result into cash flow? Give reason in support of your answer.
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
Give the meaning of ‘Cash Flow’.
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, Prepare a Cash Flow Statements as per AS- 3 (revised)
|
Liabilities |
2008 Amount Rs |
2009 Amount Rs |
Assets |
2008 Amount Rs |
2009 Amount Rs |
|
Share Capital |
12,000 |
15,000 |
Furniture |
5,000 |
8,000 |
|
P & L Account |
5,000 |
6,000 |
Stock |
6,000 |
4,000 |
|
Creditors |
15,000 |
11,000 |
Debtors |
10,000 |
8,000 |
|
|
|
|
Cash |
11,000 |
12,000 |
|
|
32,000 |
32,000 |
|
32,000 |
32,000 |
|
|
|
|
|
|
|
A dividend of Rs 3,000 was paid during the year 2008-09
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.
From the information given below you are required to calculate the cash paid for the inventory:
|
Particulars |
(Rs) |
|
Inventory in the beginning |
40,000 |
|
Credit Purchases |
1,60,000 |
|
Inventory in the end |
38,000 |
|
Trade payables in the beginning |
14,000 |
|
Trade payables in the end |
14,500 |
From the following particulars of Bharat Gas Limited, calculate Cash Flows from Investing Activities. Also, show the workings clearly preparing the ledger accounts:
Balance Sheet of Bharat Gas Ltd. as on 31 Mar. 2016 and 31 Mar. 2017
| Particulars | Note No. | Figures as the end of 2017 (Rs) |
Figures as at the end of reporting 2016 (Rs) |
| II) Assets | |||
|
1. Non-current Assets |
|||
|
a) Fixed assets |
|||
|
i) Tangible assets |
1 | 12,40,000 | 10,20,000 |
|
ii) Intangible assets |
2 | 4,60,000 | 3,80,000 |
|
b) Non-current investments |
3 | 3,60,000 | 2,60,000 |
Notes 1 tangible assets = Machinery
2 Intangible assets = Patents
Notes
| Figures of current year | Figures of previous year | |
| 1. Tangible Assets | ||
|
Machinery |
12,40,000 | 10,20,000 |
| 2. Intangible Assets | ||
|
Goodwill |
3,00,000 | 1,00,000 |
|
Patents |
1,60,000 | 2,80,000 |
| 4,60,000 | 3,80,000 | |
| 3. Non-current Investments | ||
|
10% long term investments |
1,60,000 | 60,000 |
|
Investment in land |
1,00,000 | 1,00,000 |
|
Shares of Amartex Ltd. |
1,00,000 | 1,00,000 |
| 3,60,000 | 2,60,000 | |
Additional Information:
(a) Patents were written-off to the extent of Rs. 40,000 and some Patents were sold at a profit of Rs. 20,000.
(b) A Machine costing Rs. 1,40,000 (Depreciation provided thereon Rs. 60,000) was sold for Rs. 50,000. Depreciation charged during the year was Rs. 1,40,000.
(c) On March 31, 2016, 10% Investments were purchased for Rs. 1,80,000 and some Investments were sold at a profit of Rs. 20,000. Interest on Investment was received on March 31, 2017.
(d) Amartax Ltd. paid Dividend @ 10% on its shares.
(e) A plot of Land had been purchased for investment purposes and let out for commercial use and rent received Rs. 30,000.
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.
What is meant by 'Cash Flows' ?
Which one is Cash Inflows from investing activities?
Name the activities which is related to long-term funds or capital of an enterprise?
Classify the following activity into operating activities, investing activities, financing activities or cash activities.
"Cash receipt from debtors"
Which of the following shall be considered as an outflow of cash in the Cash Flow Statement?
Which of the following transactions will not result in flow of cash:
