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Question
While preparing the Cash Flow Statement of Alka Ltd. 'dividend paid' was shown as an operating
activity by the accountant of the company. Was he correct in doing so? Give reason.
Solution
'Dividend paid' is not an operating activity. Dividend paid by a company is regarded as the cash outflow from financing activities.
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RELATED QUESTIONS
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.
Following is the Balance Sheets of Thermal Power Ltd. as at 31-3-2014
| Thermal Power Ltd Balance Sheet as at 31-3-2014 |
|||
| Particulars | Note No. |
2013-2014 Rs |
2012-2013 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
|
12,00,000 3,00,000
2,40,000
1,79,000 50,000 |
11,00,000 2,00,000
1,70,000
2,04,000 77,000 |
| Total | 19,69,000 | 17,51,000 | |
|
II. Assets 1. Non – Current 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 |
2 3
|
10,70,000 40,000
2,40,000 1,29,000 1,70,000 3,20,000 |
8,50,000 1,12,000
1,50,000 1,21,000 1,43,000 3,75,000 |
| Total | 19,69,000 | 17,51,000 | |
Notes to Accounts
| Note No | Particulars | 31-3-2015 | 31-3-2014 |
|
1
2
3
|
Reserve and Surplus (Surplus i.e. Balance in Statement of Profit and Loss) Tangible Assets Machinery Less: Accumulated Depreciation Intangible Assets Goodwill |
3,00,000
12,70,000 (2,00,000)
40,000 |
2,00,000
10,00,000 (1,50,000)
1,12,000 |
Additional Information:
During the year a piece of machinery, costing Rs 24,000 on which accumulated depreciation was Rs 16,000, was sold for Rs 6,000.
Prepare Cash Flow Statement
While preparing Cash Flow statement of Sharda Ltd. 'Depreciation provided on fixed assets' was added to net profit to calculate cash flow from operating activities. Was the accountant correct in doing so? Give reason.
Which of the following transactions will result in the flow of cash?
(1) Deposited Rs 40,000 into the bank.
(2) Withdrew cash from bank Rs 54,000.
(3) Sold marketable securities of Rs 25,000 at par.
(4) The sold machinery of the book value of Rs 50,000 at a gain of Rs 10,000
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 any two advantages of preparing cash flow statement.
While preparing Cash Flow Statements what type of activity is, ‘Payments of Cash to acquire Debentures by an investment company?
State with reason whether deposit of cash into Bank will result into inflow, outflow or no flow of cash.
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"Indirect" method of ascertaining Cash Flow from Operating 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.
Name the activities that is related to purchase and sale of long-term assets or fixed assets such as machinery, furniture, land and building, etc.?
Which of the following transactions will not result into flow of cash?
Which of the following shall be considered as an outflow of cash in the Cash Flow Statement?
Cash flow example from an Investing activity is:
______ reconciles the opening cash balance with the closing cash balance of a given period on the basis of a net decrease or increase in cash during that period.
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
Maturity period for a Short-term Investment from the date of its purchase to be considered as cash equivalents should be:
