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Question
While preparing Cash Flow Statements, What type of activity is ‘Payments of cash to aquire shares of another company by a trading company’.
Solution
Investing Activity
Reason: Selling and purchasing of shares and other financial instrument is not a main activity of the enterprise other than the enterprises who deals in selling and purchasing of investment.
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RELATED QUESTIONS
Does movement between items that constitute cash or cash equivalents result into cash flow? Give reason in support of your answer.
Will 'acquisition of machinery by an issue of equity shares' be considered while preparing 'Cash Flow Statement'? Give reason in support of your answer.
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
State the meaning of ‘Cash Flow’ while preparing Cash Flow Statement.
Under which type of activity will you classify' Dividend received by a financial company' while preparing Cash Flow Statement?
Long Answer Question
Explain the major Cash Inflows and outflows from financing activities.
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 Balance Sheet of Yogeta Ltd., prepare cash flow statement:
| Particulars | Note No. | 31st March 2017 (Rs) |
31st March 2016 (Rs) |
| I) Equity and Liabilities | |||
|
1. Shareholders’ Funds |
|||
|
a) Share capital |
1 | 4,00,000 | 2,00,000 |
|
b) Reserves and surplus-Surplus |
2,00,000 | 1,00,000 | |
|
2. Non-current Liabilities |
|||
|
a) Long-term borrowings |
2 | 1,50,000 | 2,20,000 |
|
3. Current Liabilities |
|||
|
a) Short-term borrowings |
1,00,000 | - | |
|
(Bank overdraft) |
|||
|
b) Trade payables |
70,000 | 50,000 | |
|
c) Short-term provision |
50,000 | 30,000 | |
|
(Provision for taxation) |
|||
| Total | 9,70,000 | 6,00,000 | |
| II) Assets | |||
|
1. Non-current assets |
|||
|
a) Fixed assets |
|||
|
i) Tangible |
7,00,000 | 4,00,000 | |
|
2. Current assets |
|||
|
a) Inventories |
1,70,000 | 1,00,000 | |
|
b) Trade Receivables |
1,00,000 | 50,000 | |
|
c) Cash and cash equivalents |
- | 50,000 | |
| Total | 9,70,000 | 6,00,000 |
Notes to Accounts -
| Particulars | 31st March 2017 (Rs) |
31st March 2016 (Rs) |
| 1. Share capital | ||
|
a) Equity share capital |
3,00,000 | 2,00,000 |
|
b) Preference share capital |
1,00,000 | - |
| 4,00,000 | 2,00,000 | |
| 2. Long term borrowings | ||
|
Long-term loan |
- | 2,00,000 |
|
Long-term Rahul |
1,50,000 | 20,000 |
| 1,50,000 | 2,20,000 |
Additional Information:
Net Profit for the year after charging Rs. 50,000 as Depreciation was Rs. 1,50,000. Dividend paid on Share was Rs. 50,000, Tax Provision created during the year amounted to Rs. 60,000. 8% loan was repaid on March 31, 2017 and an additional 9% loan of Rs. 1,30,000 was obtained from Rahul on April 01, 2016.
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.
Answer the following question:
State giving reason, whether the issue of shares for consideration other than cash will result into inflow, outflow or no flow of cash.
"______ 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"
Which one is Cash Outflows from Financing activities?
Classify the following activity into operating activities, investing activities, financing activities or cash activities.
"Cash Sales"
Classify the following activity into operating activities, investing activities, financing activities or cash activities ·
"Proceeds from long-term borrowings."
Tax paid on dividend should be classified as which type of activity along with dividend paid.
Cash from Operating Activities will decrease due to:
State whether the following transaction will result in inflow, outflow or no flow of cash while preparing cash flow statement:
Issued bonus shares ₹ 5,00,000.
Which of the following transactions will not result in flow of cash:
From the following information of Hoopla Ltd., you are required to prepare a Cash Flow Statement (as per AS 3) for the year 2021 - 22.
| Particulars | (₹) | |
| (i) | Profit for the year 2021-22, before considering dividend and tax but after taking into account the following items: |
15,80,000 |
| (a) Depreciation on Property, Plant & Equipment | 5,50,000 | |
| (b) Interest Payable on Bank Loan | 3,80,000 | |
| (c) Profit on sale of investments, the book value of which was ₹ 2,20 000. |
1,00,000 | |
| (ii) | During the year 2021-22: | |
| (a) The company | ||
| • Paid Tax (which was provided in 2020 - 21) | 4,40,000 | |
| • Issued 66,000 equity shares of ₹ 10 each | 6,60,000 | |
| • Repaid Bank Loan | 15,00,000 | |
| • Paid interest on Bank Loan | 3,00,000 | |
| • Paid Dividend | 5,00,000 | |
| (b) Trade payables decreased by | 10,000 | |
| (c) Cash at bank increased from ₹ 60,000 on 1st April, 2021 to ₹ 7,00,000 on 31st March, 2022. |
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.
