DK Goel Solutions Chapter 6 Cash Flow Statements

Read below DK Goel Solutions for Class 12 Chapter 6 Cash Flow Statements. These solutions have been designed based on the latest Class 12 DK Goel Accountancy book used by commerce stream students issued for the current year and the questions given in each chapter.

Cash flow statements are generally Prepared in all organizations to understand the cash situation of an organization.

In this chapter, the students will understand basic concepts of cash flow statements and their usage. they will also understand how to create basic cash flow statements and with the help of questions given at the end of the chapter they will be able to practice and gain more understanding of these topics.

The chapter contains a lot of questions which can be very helpful for Class 12 commerce students of Accountancy and will also help build strong concepts which will be really helpful in your career. These solutions are free and will help you to prepare for Class 12 Accountancy. Just scroll down and read through the answers provided below

Cash Flow Statements DK Goel Class 12 Accountancy Solutions

Short Answer Questions

Q1. For calculating ‘cash flow from operating activities’ from the given figure of ‘Net Profit’ earned during a year, how would you deal with (a) Increase in Trade Receivable, (b) Decrease in Inventory, (c) Decrease in Bills Payable, and (d) Increase in Trade Payables?
Solution 1
(a) Increase in Trade Receivable:- Less
(b) Decrease in Inventory:- Add
(c) Decrease in Bills Payable:- Less
(d) Increase in Trade Payables:- Add

Q2. For calculating ‘cash flow from operating activities’ from a given figure of ‘Net Profit’ earned during a year, how would you deal with (a) the redemption of debentures, (b) decrease in outstanding expenses, (c) increase in cash balance, and (d) decrease in inventory?
Solution 2
(a) the redemption of debentures:- No effect
(b) decrease in outstanding expenses:- Less
(c) increase in cash balance:- No effect
(d) decrease in inventory:- Add

Q3. Explain the method of calculating ‘Cash flows from Operating Activities’ under indirect method.
Solution 3
The main revenue-generating activities of a company are its operating operations. As a result, they include cash flows from operations and events that are used to calculate the company’s net profit or loss. Here are some examples of cash flows produced by corporate activities:
(a) Receipts in cash from the selling of goods and the provision of services.
(b) Taxes, fees, commissions, and other income in cash.
c) Receipts of cash from debtors and payables.
d) Receipts for the purchase of goods and services in cash.
e) Contributions to creditors in cash and payable bills.
f) Wages, bonuses, and other payments to workers in cash.
(g) Cash transfers or tax refunds unless they can be directly linked to funding or investment activities.

Q4. Prepare a format of ‘Cash Flow Statement’ under indirect method.
Solution 4

Below is the format of Cash Flow Statement by indirect method:-

Cash Flow Statement of Ltd. for the year ended______

Q5. Classify the following into Cash flows from (i) Operating Activities, (ii) Investing Activities, and (iii) Financing Activities while preparing a Cash flow statement under direct method:
(a) Purchase of Fixed Assets;
(b) Issue of Share Capital;
(c) Payment of Income Tax;
(d) Payment of Divided;
(e) Payment of Interest;
(f) Sale of Long-term Investments;
(g) Interest Received;
(h) Dividend Received;
(i) Repayment of Long-term Loans.
Solution 5
Cash from Operating Activities:- Payment of Income Tax
Cash from Investing Activities:- Purchase of Fixed Assets, Sale of Long-term Investments, Interest Received, Dividend Received
Cash from Financing Activities:- Issue of Share Capital, Payment of Divided, Payment of Interest, Repayment of Long-term Loans

Q6. For each of the following transactions, calculate the resulting cash flow and state the nature of cash flow viz., operating, investing and financing.
(a) Acquired machinery for Rs. 2,50,000 paying 20% down and executing a bond for the balance payable.
(b) Paid Rs. 2,50,000 to acquire shares in Informa Tech. and received a dividend of Rs. 50,000 after acquisition.
(c) Sold machinery of original cost Rs. 2,00,000 with an accumulated depreciation of Rs. 1,60,000 for Rs. 60,000.
Solution 6
(i) Machinery Purchased = Rs. 2,50,000 × 20% = Rs. 50,000
Cash used in Investing Activities:- Rs. 50,000

(ii) Rs. Paid = Rs. 2,50,000
Dividend Received = Rs. 50,000
Net Rs. Paid = Rs. 2, 50,000 – Rs. 50,000 = Rs. 2,00,000
Cash used in Investing Activities:- Rs. 2,00,000

(iii) Cash received by sale of machinery.
Cash from Investing Activities:- Rs. 60,000

Numerical Questions
Q1. Identify the following transactions as belonging to (i) Opening, (ii) Investing, (iii) Financing Activity and (iv) Cash Equivalents:

1. Interest paid
2. Interest paid on long-term loans by
(a) Finance Company
(b) Non-finance Company
3. Interest received
4. Interest received on Investments by a bank
5. Interest received in investments by a manufacturing company
6. Dividend received
7. Dividend received by a Mutual Fund Company
8. Purchase of Investments
9. Purchases of Investments by a finance Company
10. Purchases of Investment by a non-finance company
11. Bank Balance
12. Short-term deposit in banks
13. Bank Overdraft
14. Marketable Securities
Solution 1
Below are the items classification of transactions of Operating Activity, Investing Activity and Financial Activity:-
(i) Operating Activities:- Finance Company, Interest received on Investments by a bank, Dividend received by a Mutual Fund Company, Purchases of Investments by a finance Company.
(ii) Investing Activities:- Interest received, Interest received in investments by a manufacturing company, Dividend received, Purchase of Investments, Purchases of Investment by a non-finance company.
(iii) Financing Activities:- Interest paid, Non-finance Company, Bank Overdraft.
(iv) Cash Equivalents:- Bank Balance, Short-term deposit in banks, Marketable Securities.

Points for Students:-
Bank, Investment Companies and Mutual Funds are financing companies. All trading Companies, manufacturing companies and other business establishments are non-financing companies.

Q2. Classify the following activities into (i) Operating Activities, (ii) Investing Activities and (iii) Financing Activities in case of (a) a Financing Enterprise and (b) a Manufacturing Enterprise:

1. Purchase of Shares of a Company.
2. Proceeds from sale of Shares.
3. Brokerage paid on purchase of Shares.
4. Loans and Advances made to third parties.
5. Dividend and interest received on Securities.
6. Salary paid to employees.
7/ Interest paid on debentures.
8. Dividend paid to Shareholders.
Solution 2
Below are the items classification of transactions of Operating Activity, Investing Activity and Financial Activity:-

Financing Enterprise:-
(i) Operating Activities:-
1. Purchase of Shares of a Company.
2. Proceeds from sale of Shares.
3. Brokerage paid on purchase of Shares.
4. Loans and Advances made to third parties.
5. Dividend and interest received on Securities.
6. Salary paid to employees.
7. Interest paid on debentures.
(ii) Financing Activities:-
8. Dividend paid to Shareholders.
For Manufacturing Enterprise:-
(i) Operating Activities:-
1. Purchase of Shares of a Company.
2. Proceeds from sale of Shares.
3. Brokerage paid on purchase of Shares.
4. Loans and Advances made to third parties.
5/ Dividend and interest received on Securities.
(ii) Investing Activities:-
6. Salary paid to employees.
(iii) Financing Activities:-
7. Interest paid on debentures.
8. Dividend paid to Shareholders.

Points for Students:-
An Investment Company is a Financial Enterprise since purchases and sale of securities are its main revenue-producing activity. Similarly, giving and taking loans is also revenue producing activity for a financial enterprise.

Q3. Classify the following transactions as (i) Operating Activities, (ii) Investing Activities, (iii) Financing Activities, and (iv) Cash and Cash Equivalents:

1. Purchase of Shares.
2. Buy-back of Equity Shares.
3.Payment of Share issue expenses.
4. Discount allowed to Customers.
5. Discount received from Suppliers.
6. Increase in balance of Cash Credit.
7. Repayment of Long-term Loan.
8. Repayment of Short-term Loan.
9. Proceeds from Short-term Borrowings
10. Dividend paid on Preference Shares.
11. Short-term deposits in Bank.
12. Rent received by a Company whose main business in Real Estate Business.
13. Rent received by a Company whose main business in manufacturing.
Solution 3
Below are the items classification of transactions of Operating Activity, Investing Activity and Financial Activity:-
(i) Operating Activities : Discount allowed to Customers, Discount received from Suppliers, Rent received by a Company whose main business in Real Estate Business.
(ii) Investing Activities : Rent received by a Company whose main business in manufacturing, Purchase of Shares
(iii) Financing Activities : Buy-back of Equity Shares, Payment of Share issue expenses, Increase in balance of Cash Credit, Repayment of Long-term Loan, Repayment of Short-term Loan, Proceeds from Short-term Borrowings, Dividend paid on Preference Shares.
(iv) Cash Equivalents : Short-term deposits in Bank

Points for Students:-
For an Insurance Company, receipt of premium and payment of claim shall be classified as Operating Activities since they relate to main revenue
producing activity for it.
For a Real Estate Enterprise, purchase and sale of land and rent received shall be classified as Operating Activities since they relate to its main revenue producing activity.

Q4. State which of the following would result in inflow/outflow of Cash or Cash Equivalents:

1. Purchases of Goods on Credit.
2. Sale of Goods costing Rs. 20,000 for Rs. 15,000 for cash.
3. Purchases of a fixed asset on long-term deferred payment basis.
4. Issue of shares against purchase of fixed assets.
5. Cash received from a Trade Receivable Rs. 10,000 discount allowed Rs. 1,000.
6. Sale of Fixed assets (book value Rs. 25,000) for Rs. 20,000 for cash.
7. Old Furniture (book value Rs. 10,000) written off.
8. Bill Receivable endorsed to trade payables.
9. Discount of Rs. 2,000 received while making payment to a creditor of Rs. 20,000.
10. Cash deposited into Bank.
11. Sale of Marketable Securities for cash.
12. Sale of Long-term Investments for cash.
13. Converting of Debentures into Shares.
14. Declaration of Dividend.
15. Payment of Dividend.
16. Receipt of Interest on Investment.
17. Receipt of Dividend.
Solution 4
Statement showing the effect of transactions on Cash and Cash Equivalents:

1. Purchases of Goods on Credit.
Effect on Cash – No Effect
Reason – Cash not affected
2. Sale of Goods costing Rs. 20,000 for Rs. 15,000 for cash.
Effect on Cash – Inflow
Reason – Rs. 15,000 increased in Cash
3. Purchases of a fixed asset on long-term deferred payment basis.
Effect on Cash – No Effect
Reason – Cash not affected
4. Issue of shares against purchase of fixed assets.
Effect on Cash – No Effect
Reason – Cash not affected
5. Cash received from a Trade Receivable Rs. 10,000 discount allowed Rs. 1,000.
Effect on Cash – Inflow
Reason – Rs. 10,000 increased in Cash
6. Sale of Fixed assets (book value Rs. 25,000) for Rs. 20,000 for cash.
Effect on Cash – Inflow
Reason – Rs. 20,000 increased in Cash
7. Old Furniture (book value Rs. 10,000) written off.
Effect on Cash – No Effect
Reason – Cash not affected
8. Bill Receivable endorsed to trade payables.
Effect on Cash – No Effect
Reason – Cash not affected
9. Discount of Rs. 2,000 received while making payment to a creditor of Rs. 20,000.
Effect on Cash – Outflow
Reason – Rs. 18,000 decreased in Cash
10. Cash deposited into Bank.
Effect on Cash – No Effect
Reason – Cash not affected
11. Sale of Marketable Securities for cash.
Effect on Cash – No Effect
Reason – Cash not affected
12. Sale of Long-term Investments for cash.
Effect on Cash – Inflow
Reason – Cash Increased
13. Converting of Debentures into Shares.
Effect on Cash – No Effect
Reason – Cash not affected
14. Declaration of Dividend.
Effect on Cash – No Effect
Reason – Cash not affected
15. Payment of Dividend.
Effect on Cash – Outflow
Reason – Cash Decreased
16. Receipt of Interest on Investment.
Effect on Cash – Inflow
Reason – Cash Increased
17. Receipt of Dividend.
Effect on Cash – Inflow
Reason – Cash Increased

Points for Students:-
According to AS-3 Revised, the cash flow statement summarizes the cash inflows and cash outflow and the net changes in cash and cash equivalents resulting from operating, investing and financing activities of a firm during a period.

Q5. State which of the following would result in inflow, outflow or no flow of cash:

1. A long-term loan from a bank.
2. Repayment of long-term loan.
3. Payment of interest on loan.
4. Conversion of debentures into preference shares.
5. Interest received on investments.
6. Interest due on dentures.
7. Receipt of accrued interest.
8. Purchase of securities of a company.
9. Buy-back of Equity Shares.
10. Purchase of Goodwill.
11. Goodwill written off.
12. Patents written off.

Solution 5
Statement showing the effect of transactions on Cash and Cash Equivalents:
1. A long-term loan from a bank
Effect on Cash – Inflow
Reason – Cash increased
2. Repayment of long-term loan.
Effect on Cash – Outflow
Reason – Cash decreased
3. Payment of interest on loan.
Effect on Cash – Outflow
Reason – Cash decreased
4. Conversion of debentures into preference shares.
Effect on Cash – No effect
Reason – Cash is not affected
5. Interest received on investments.
Effect on Cash – Inflow
Reason – Cash increased
6. Interest due on dentures.
Effect on Cash – No effect
Reason – Cash is not affected
7. Receipt of accrued interest.
Effect on Cash – Inflow
Reason – Cash increased
8. Purchase of securities of a company.
Effect on Cash – Outflow
Reason – Cash decreased
9. Buy-back of Equity Shares.
Effect on Cash – Outflow
Reason – Cash decreased
10. Purchase of Goodwill.
Effect on Cash – Outflow
Reason – Cash decreased
11. Goodwill written off.
Effect on Cash – No effect
Reason – Cash is not affected
12. Patents written off.
Effect on Cash – No effect
Reason – Cash is not affected

Points for Students:-
In case of financial enterprise such as Bank or Mutual Fund Company cash outflow and cash inflow arising from the purchase and sale of securities will be treated as flow from Operating Activities. This is, because, purchase and sale of securities is a part of main revenue generating activities in case of financial enterprises.

Q6.(A)Calculate ‘Cash from operating activities’ from the following balances:-

Operating profit before working capital charges was Rs. 1,30,000.
Solution 6
(A)
Cash Flows from Operating Activities for the year ended 31st March, 2017

Points for Students:-
Cash flow arising from operating activities are:
1.) Cash receipts from the sale of goods and rendering of services.
2.) Cash receipts from royalties, fees, commission and other revenue.
3.) Cash receipts from Debtors and Bills Receivables.
4.) Cash payment for purchase of goods and services.
5.) Cash payments to creditors and bills payables

Q6.
(B)

Calculate ‘Cash from operating activities’ from the following figures:

Solution 6
(B)

Cash Flows from Operating Activities for the year ended 31st March, 2017

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. Borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q7. Calculate ‘Cash from operating activities’ from the following:-
(i) Profits made during the year Rs. 2,50,000 after considering the following items:-

(ii) Additional Information:-

Solution 7
Cash Flows from Operating Activities for the year ended 31st March, 2018

Points for Students:-
Investing activities includes the purchases and sale of long-term assets such as land, building, plant and machinery etc. not held for resale. These activities also include the purchase and sale of such investments which are not included in cash equivalents. Cash flow from investing activities discloses the expenditures incurred for resources intended to generate future income and cash flows.

Q8. On March 31st, 2018 Ramesh and Co. indicated a profit of Rs. 1,25,000, after considering the following:

Ascertain the net cash (cash flow) from operating activities.
Solution 8

Cash Flows from Operating Activities for the year ended 31st March, 2018

Q9. (A) Narula Ltd. earned a profit of Rs. 2,00,000 after charging or crediting the following items:-

You are required to determine the Cash from operating activities.
Solution 9
(A)

Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-

Q9. (B) Calculate net-cash flows from operating activities from the following information:

Solution 9
(B)

Cash Flows from Operating Activities for the year ended 31st March, 2017

Q10. Z Ltd. made a profit of Rs. 20,00,000 after charging Depreciation Rs. 1,50,000, writing off preliminary expenses of Rs. 10,000 and loss on sale of assets Rs. 30,000. The other information available to you is as follows:
At the end of the year Trade Payables showed an increase of Rs. 45,000; Trade Receivables an increase of Rs. 53,000; Prepaid Expenses decrease of Rs. 2,000; and Outstanding Expenses decrease of Rs. 10,000.
Ascertain cash flow from operating activities.
Solution 10

Cash Flows from Operating Activities for the year ended 31st March, 2017

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q11.
(A)
Calculate ‘Cash from Operating activities’ from the following figures:-

Solution 11
(A)

Cash Flows from Operating Activities for the year ended 31st March, 2018

Q11.
(B)

Calculate ‘Cash from operating activities’ from the following:-

Solution 11
(B)

Cash Flows from Operating Activities for the year ended 31st March, 2018

Q11.
(C)

From the following figures calculate ‘cash from operating activities’:

Q11.
(D)
Calculate ‘cash from operating activities’ from the following:-
(i) Profit for the year amounted to Rs. 50,000 after providing for depreciation of Rs. 20,000.
(ii) Following is the position of current assets and current liabilities:-

Solution 11
(D)

Cash Flows from Operating Activities for the year ended 31st March, 2018

Q12.

Calculate ‘Cash from operating activities’ from the following:-

Solution 12

Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
Operating Loss for the year = Profit and Loss (Current Year) – Less: Profit and Loss (Foregoing Year)
Operating Loss for the year = 50,000 – 60,000
Operating Loss for the year = (10,000)

Q13.

Following is the position of Current Assets and Current Liabilities of X ltd.:-

The company incurred a loss of Rs. 37,000 during the year. Calculate ‘Cash from operating activities’.
Solution 13

Cash Flows from Operating Activities for the year ended 31st March, 2018

Q14. Calculate cash from operating activities from the following Balance Sheets of Himalya Ltd.

Additional Information:-
(i) Additional Debentures were issued on 1st April, 2017.
(ii) Additional Investments were made on 1st April, 2017.
Solution 14

Working Note:-
Operating Loss for the year = Profit and Loss (Current Year) – Profit and Loss (Foregoing Year)
Operating Loss for the year = (20,000) – 50,000
Operating Loss for the year = (70,000)

Net Profit = Operating Loss for the year + Transfer to General Reserve
Net Profit = 70,000 + 20,000
Net Profit = 90,000

Q15. Y Ltd. reported a net profit after tax of Rs. 3,10,000 for the year ended 31st March 2016. The relevant items of Balance Sheet appeared as follows:

Following item appeared on the Profit & Loss Statement for the year ended 31st March, 2016:
(i) Bad Debts written off during the year Rs. 10,000
(ii) Depreciation on Fixed assets charged during the year Rs. 34,000
Calculate the net cash flow from Operating Activities.
Solution 15

Q16. Calculate ‘Cash from Operating Activities’ from the following Balance Sheets:

Solution 16

Q17. From the following Statement of Profit & Loss for the year ended on 31st March, 2018, Calculate the amount of ‘Cash Generated from operating activities’:

Additional Information:-
Outstanding Wages Rs. 40,000
Outstanding Salaries Rs. 30,000
Prepaid Insurance Rs. 3,000

Solution 17

Q18. Following is the Profit and Loss Statement of Z Ltd. for the year ended 31st March, 2018:

Statement of Profit and Loss
for the year ended 31st March, 2018

Solution 18

Q19. The following is the Statement of Profit and Loss of Z Ltd. for the year ended March 31, 2018:

Statement of Profit and Loss
for the year ended 31st March, 2018

Additional Information:-
(i) Sundry Creditors increased by Rs. 40,000 during the year.
(ii) Sundry Debtors increased by Rs. 70,000 during the year.
(iii) Outstanding wages decreased by Rs. 10,000 during the year.
(iv) Bills Receivable decreased by Rs. 5,000 during the year.
(v) Prepaid expenses decreased by Rs. 20,000 during the year.
Compute net Cash from operation by the indirect method.
Solution 19

Q20.
(A) From the following information, calculate ‘cash inflow from operating activities’:-

Solution 20
(A)

Q20.
(B) From the following information calculate ‘Cash from operating activities’:

Solution 20 (B)

Q21. From the following particulars, calculate cash flow from investing activities:

Dividend received on shares held as Investments Rs. 10,000
Interest received on debentures held as Investments Rs. 8,000
Dividend paid on equity share capital Rs. 50,000
Solution 21

Q22. X Ltd. has Plant and Machinery whose written down value on 1st April, 2014 was Rs. 15,40,000 and on 31st March, 2015 was Rs. 19,10,000. Depreciation for the year was Rs. 1,50,000. In the beginning of the year, a part of plant was sold for Rs. 2,20,000 which had a written down value of Rs. 3,00,000.
Calculate Cash Flow from Investing Activities.
Solution 22

Q23. Calculate Cash Flows from Investing Activities from the following information:

Additional information:-
A machine costing Rs. 40,000 (depreciation provided thereon Rs. 12,000) was sold for Rs. 35,000. Depreciation charged during the year was Rs. 60,000.
Solution 23

Q24. From the following information, calculate the Cash Flow from Investing Activities of X Ltd.:

Additional Information:
i.) Half of the Non-Current investments held in the beginning of the year were sold at 15% profit.
ii.) Depreciation of Fixed Assets was Rs. 1,60,000 for the year.
iii.) Interest received on Non-Current investments: Rs. 50,000.
iv.) Dividend received on Non-Current investments: Rs. 20,000.
v.) Rent received: Rs. 25,000.
Solution 24

Working Note:-

Q25. The balance in Plant and Machinery account and Accumulated depreciation account as on March 31, 2015 and 2016 stood as follows:

Q26. From the following particulars, calculate cash from Investing Activities:

Additional Information:-
During the year:
(i) Depreciation charged on Plant and Machinery Rs. 80,000
(ii) A machine having a book value of Rs. 1,40,000 was sold for Rs. 1,50,000.
(iii) Patents having a book value of Rs. 60,000 were sold for Rs. 45,000.
Solution 26

Working Notes:-

Accumulated Depreciation Account

Q27. (A) D.K. Ltd. provides you the following information:-
Non-Current Investments as on 31-03-2017 Rs. 1,20,000
Non-Current Investments as on 31-03-2018 Rs. 40,000
During the year 2018, the company sold 80% of its original investments at a profit of 20% on book value. Calculate sources and uses of cash.
Solution 27
(A)

Plant & Machinery Account

Q27. (B) X Ltd. provides you the following information:
Non-Current Investments as on 31-03-2017 Rs. 50,000
Non-Current Investments as on 31-03-2018 Rs. 60,000
During the year 2018, X Ltd. purchased investments costing Rs. 25,000 and sold some investments at a loss of 20% on book value. Calculate sources of cash.
Solution 27
(B)
Cost of Investments Sold:

Q28. From the following information, calculate cash flow from investing activities:

Additional Information:-
(i) Depreciation charged on Plant and Machinery Rs. 72,000.
(ii) Plant and Machinery with a book value of Rs. 1,20,000 was sold for Rs. 75,000
(iii) Investments were purchased for Rs. 3,00,000. Some investments were sold at a loss of Rs. 10,000. Interest received on investments during the year Rs. 15,000.
(iv) Land was sold at a profit of Rs. 80,000.
Solution 28

Cash Flows From Investing Activities

Q29. Calculate Cash Flows from financing activities from the following particulars:

Additional Information:
(i) Equity Shares were issued at a premium of 2%.
(ii) 8% Preference Shares were redeemed at a premium of 2%.
(iii) 9% Debentures were issued at a discount of 1% and 7% debentures were redeemed at a premium of 5%.
(iv) Underwriting commission on Equity Shares was paid @ 2.5% on issue price.
(v) Interest paid on 7% debentures Rs. 7,000.
(vi) Dividend paid on preference shares Rs. 8,000.
Solution 29

Q30. Calculate Cash flows from financing activities from the following particulars:

Additional Information:-
(i) New shares and debentures were issued on March 31, 2018.
(ii) Dividend on preference shares was paid.
(iii) Proposed Dividend on Equity Share Capital was:
For 31st March, 2018 @ 15%
For 31st March, 2018 @ 20%
(iv) Preference shares were redeemed on March 31, 2018 at a premium of 4%. Premium on redemption was provided out of profit.
Solution 30

Q31. From the following Balance Sheet of Enclitic Ltd. as at 31st March and the additional information provided calculate (i) Cash from ‘Operating Activities’ and (ii) cash from ‘Financing Activities’.

Additional Information:-
(i) Depreciation provided on Fixed Assets Rs. 60,000.
(ii) Preference shares were redeemed at a premium of 5% on 31st March, 2018.
(iii) Additional debentures were issued on 1st October, 2017.
(iv) Proposed divided on equity share capital for foregoing year ended 31st March, 2017 was paid @ 18%.
Solution 31

Cash Flows from Operating Activities

32. Sony Ltd. provides you the following information. Calculate Cash flows from financing activities:

Additional Information:-
(i) During the year 2017-18, Sony Ltd. issued bonus shares in the ratio of 4:1 by capitalizing reserve.
(ii) 10% debentures were redeemed on 1 Jan., 2018 at a premium of 5%.
(iii) Preference Dividend paid Rs. 8,000.
(iv) Dividend received on investments Rs. 10,000.
Solution 32

Cash Flows From Financing Activities

Q33. From the following information, Calculate:
(i) Cash Flows from Investing Activities, and
(ii) Cash Flow from Financing Activities.

Additional Information:-
(i) During the year a machine costing Rs. 1,50,000 was sold at a loss of Rs. 44,000. Depreciation on Plant and Machinery charged during the year amounted to Rs. 80,000.
(ii) Interest paid on Bank Overdraft amounted to Rs. 28,000.
(iii) Debentures were redeemed on 1st October 2017 at a premium of 4%.
Solution 33

Cash Flows From Investing Activities

Cash Flows From Financing Activities

Q34. Prepare a Cash-Flow Statement from the following Balance Sheets of Nilgiri Tea Ltd.:-

Q35. (A)

Following is the Balance Sheet of Rahul & Co. for two years. Prepare Cash Flow Statement:-

Solution 35
(A)

Cash Flows from Operating Activities for the year ended 31st March, 2016

Q35. (B)

Following are the Balance Sheets of Fast Foods Ltd

Working Note:-
Net Profit = Retained Earnings on 31-03-2018 – Retained Earnings on 31-03-2017
Net Profit = 60,000 – 50,000
Net Profit = 10,000

Q36. Following are the Balance Sheet of Krishtec Ltd. as at 31st March 2018 and 2017:

Prepare a Cash Flow Statement after taking into account the following adjustments:
(a) The company paid interest Rs. 36,000 on its long term borrowings.
(b) Depreciation charged on tangible fixed assets was Rs. 1,20,000.
Solution 36

Working Note:-

Q37. (A) Following are the Balance Sheets of Quick Gains Ltd.:-

Notes:

Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-

Q37.
(B)Prepare a Cash Flow Statement from the following Balance Sheet of Garden Honey Ltd.:-

Solution 37
(B) Cash Flows from Operating Activities for the year ended 31st March, 2018

Q38. From the following Balance Sheet of Ajanta Limited as at March 31, 2017, prepare a cash Flow Statement:

Additional Information:-
(a) During the year 2016-17, a machinery costing Rs. 50,000 and accumulated depreciation thereon Rs. 15,000 was sold for Rs. 32,000.
(b) 9% Debentures Rs. 80,000 were issued on April 1, 2016.
Solution 38

Cash Flows from Operating Activities for the year ended 31st March, 2017

Working Note:-

Q39. Prepare ‘Provision for Income Tax Account’ from the following information’s for preparing Cash Flow Statements:

Q40. Prepare ‘Provision for Income Tax Account’ from the following information’s for preparing Cash Flow Statements:

Q41. From the following Balance Sheets of Vivek Ltd. prepare Cash Flow Statements:

Additional Information:
(i) Depreciation charged on Plant was Rs. 30,000 and on Building Rs. 50,000.(ii) Income Tax paid during the year amounted to Rs. 25,000
Solution 41 Cash Flows from Operating Activities for the year ended 31st March, 2017
Particulars Details Amount

Working Note:-

Q42. From the following Balance Sheet of Tarun Fashions Ltd., prepare a Cash Flow Statement:-

(i) Proposed Dividend 15,000 12,000
(ii) Depreciation of Rs. 10,000 was provided on Plant and Machinery.
(iii) Gain on sale of a part of Building Rs. 25,000.
(iv) Debentures were redeemed on 1st April, 2017.
(v) Provision for Tax made during the year Rs. 50,000.
Solution 42 Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-

Q43. (A) Prepare a Cash-Flow Statement from the following Balance Sheet of Dry Fruits Ltd.:-

Additional Information:-
(i) Interest paid on mortgage loan amounted to Rs. 14,100.
(ii) Interim Dividend paid during the year Rs. 20,000.
(iii) Machinery costing Rs. 40,000 (accumulated depreciation thereon being Rs. 18,000) was sold for Rs. 5,000.
Solution 43 (A) Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-

Q43. (B) Prepare a Cash-Flow statement from the following:-

Additional Information:-
i. During the year, company sold 60% of its original non-current investments at a profit of 25%.
ii. Depreciation provided during the year was Rs. 35,000.
Solution 43
(B) Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-

Q44. (A) Prepare a Cash-Flow statement from the following Balance Sheet of ONIDA Ltd:-

Additional Information:-
(1) Debentures were issued on 1st October 2017. Interest has paid-up to date.
(2) Machinery whose original cost was Rs. 50,000 (accumulated depreciation thereon being Rs. 27,000) was sold for Rs. 35,000.
(3) Depreciation on Machinery charged during the year Rs. 15,000.
(4) Interim Dividend paid during the year was @ 15% on share capital.
Solution 44
(A

Additional Information:-
(i) Interim Dividend paid during the year Rs. 60,000.
(ii) Land was sold at a profit of Rs. 30,000.
(iii) Plant costing Rs. 20,000 was sold during the year at a loss of Rs. 8,000.
Solution 44
(B

Q45. From the following Balance Sheet of Vijaya Ltd. as at 31.03.2018 and 31.03.2017 prepare a cash flow statement.

Additional Information:-
(i) Depreciation on Fixed Asses for the year 2017-2018 was Rs. 14,700.
(ii) An interim dividend Rs. 7,000 has been paid to the shareholders during the year.
Solution 45

Cash Flows from Operating Activities
for the year ended 31st March, 2018

Q46. The Balance Sheets of X Ltd. as at 31st March 2018 and 31st March 2017 were as follows:

(ii) Depreciation charge during the year on Plant and Machinery amounted to Rs. 80,000.
(ii) Machinery costing Rs. 80,000 (Book value Rs. 30,000) was sold at a loss of 40% on book value.
Prepare Cash Flow Statement.
Solution 46 Cash Flows from Operating Activities for the year ended 31st March, 2018

Point for Students:-
There are some investing and financing activities which do not require the use of cash or cash equivalents. Such non-cash activities should be excluded from the cash flow statement.

Q47. Following are the Balance Sheets of Rishi Ltd. as at 31^st March, 2018 and 31^st March, 2017

Additional Information:-
(i) New public deposits were accepted on 1st January, 2018.
(ii) Machinery costing Rs. 2,00,000 on which depreciation charged was Rs. 70,000 was sold for Rs. 1,50,000.
(iii) New machinery purchased during the year amounted to Rs. 4,00,000.
(iv) Non-Current Investments were sold at profit of 25%.
Prepare Cash Flow Statement.
Solution 47 Cash Flows from Operating Activities for the year ended 31st March, 2018

Q48. From the following Balance Sheet of XY Ltd. prepare a Cash-Flow Statement for the year ended 31st March, 2018:

Additional Information:-
(i) Depreciation of Rs. 30,000 has been charged on machinery.
(ii) Non-Current Investments costing Rs. 30,000 were sold for Rs. 40,000 at the end of the year.
(iii) New debentures were issued on 1st Oct. 2017
(iv) During the year share issued expenses amounted to Rs. 10,000 and these were written off from statement of Profit and loss.
Solution 48 Cash Flows from Operating Activities for the year ended 31st March, 2018

Q49. From the following Balance Sheet of Som Ltd. as 31st March, 2018 and 31st March 2017 prepare a Cash Flow Statement:

Additional Information:-
(i) During the year, a machinery costing Rs. 70,000 was sold for Rs. 15,000.
(ii) Interim Dividend paid on equity share capital during the year Rs. 24,000.
Solution 49 Cash Flows from Operating Activities for the year ended 31st March, 2018

Q50. Prepare Cash Flow Statement from the following Balance Sheet of Mr. Kapoor as at 31st March…

Additional Information:-
(a) There was neither any drawing nor any capital addition during the year.
(b) There was no purchase/sale of fixed assets,
Solution 50

Cash Flows from Operating Activities for the year ended 31st March, 2018

Q51. Summarised Balance Sheet of Surya Vanaspati Ltd. as at 31st March, 2014 and 2013 are:

Additional Information:-
1. Non-Current Investments costing Rs. 20,000 were sold during the year 2013-14 at a profit of 20%.
2. Tax paid during the year was Rs. 62,000.
3. During the year, part of fixed assets costing Rs. 40,000 was sold for Rs. 50,000 and the profit was included in the Statement of Profit and Loss.
4. An Interim Dividend @ 12% was paid during the year.
Solution 51
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q52. Following was the Balance Sheet of Sreshtha Ltd. as at 31st March, 2018.

Prepare a Cash Flow Statement after taking into account the following adjustment:
During the year, a piece of machinery costing Rs. 30,000 on which accumulated depreciation was Rs. 6,000, was sold for Rs. 20,000.
Solution 52
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q53. From the following information, calculate Cash Flow from Operating Activities:

(i) A piece of machinery costing Rs. 50,000 on which depreciation of Rs. 20,000 had been charged was old for Rs. 10,000. Depreciation charged during the year was Rs. 18,000.
(ii) Income Tax Rs. 23,000 was paid during the year.
(iii) Interim Dividend paid during the year was Rs. 36,000.
Solution 53

Cash Flows from Operating Activities for the year ended 31st March, 2018

Q54. Prepare a Cash-Flow Statement from the information given below:-

Solution 54

Cash Flows from Operating Activities for the year ended 31st March, 2018

Q55. The Balance Sheet of A Ltd. as at 31st March, 2018 and 31st March, 2017 were as follows:

Additional Information:-
(i) Depreciation written off in fixed assets was Rs. 18,000.
(ii) Interest paid on Long-term Borrowing amounted to Rs. 3,000.
(iii) Income tax of Rs. 15,000 has been paid.
Prepare a Cash Flow Statement.
Solution 55
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q56. The following are the summarised Balance Sheets of X Ltd. as at 31st March, 2018 and 2017:

(ii) Provision for tax made Rs. 30,000.
(iii) Additional debentures amounting to Rs. 5,000 was issued on 1st Oct. 2017. Interest on debentures has been paid up to date.
You are required to prepare a statement of Cash Flow.
Solution 56
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q57. Prepare a Cash Flow Statement from the following Balance Sheet of Surya Vanaspati Ltd.:-

Additional Information:-
(i) During the year, machinery whose original cost was Rs. 50,000 was sold for Rs. 32,000.
(ii) Company charged Rs. 20,000 as depreciation on Plant and Machinery.
Solution 57
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-

Q58. You are required to Prepare a Cash Flow Statement (as per AS-3) for the year 2017-18 from the following Balance Sheets:

Additional Information:-
During the year 2017-18:
(i) Building costing Rs. 75,000 was purchased.
(ii) An old building, the book value of which was Rs. 63,000, was sold at a loss of Rs. 5,000.
(iii) Tax Provided during the year was Rs. 80,000.
(iv) Proposed Dividend for the year ended 31st March, 2017 was 20% and for the year ended 31st March, 2018 was 10%.
Solution 58

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q59. Prepare a Cash flow statement from the following:-

Note:-

Balance Sheet

Notes:-

Solution 59
Cash Flows from Operating Activities for the year ended 31^st March, 2018

Q60. From the following information, calculate Cash from operating activities:-

Solution 60
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q61. From the following figures, calculate Cash from operating activities:-

Solution 61
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q62. Calculate Cash from operating from the following:-

Solution 62
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q63. Following is the position of Current Assets and Current Liabilities of Z Ltd:-

The Company incurred a loss of Rs. 30,000 during the year. Calculate Cash from operating activities.
Solution 63
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q64. Raj Ltd. had a profit of Rs. 17,50,000 for the year ended 31.03.2016 after considering the following:

Calculate cash flow from operating activities.
Solution 64
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q65. From the following information, calculate Cash from operating activities:-

Solution 65
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
Calculation of Net Profit before Tax:-

Q66. The following balance appeared in Plant Account and Accumulated Depreciation Account in the books of Bharat Ltd.:-

Additional Information:-
Plant costing Rs. 1,45,000; accumulated depreciation thereon Rs. 70,000 was sold for Rs. 35,000. You are required to:
(i) Compute the amount of Plant purchased, depreciation charged for the year and loss on sale of plant.
(ii) Show how each of the items related to the plant will be shown in the cash flow statement.
Solution 66

Q67. Calculate Cash Flow from Investing Activities from the following information:
(i) Machinery costing Rs. 5,00,000 (Book value Rs. 3,50,000) was sold at a loss of 10%.
(ii) Dividend received @ 10% from Long term Investments of Rs. 2,00,000.
(iii) Receipt for permission granted for use of Trade Mark Rs. 1,20,000.
(iv) Non-Current Investments purchased Rs. 1,75,000.
(v) Non-Current Investment costing Rs. 3,00,000 was sold at a profit of 20%.
(vi) Land was sold for Rs. 6,00,000 of which 40% is profit.
Solution 67

Q68. The following information has been extracted from the books of Pure Con Company. Using the information, calculate the cash flow investing Activities:

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q69. Following are the Balance Sheets of XY Ltd. as at 31st March, 2018 and 2017:-

Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Q70. Prepare a Cash Flow Statement on the basis of the information given in the Balance Sheets of P.S. Ltd. as at 31st March 2018 and 2017:

Debentures amounting to Rs. 20,000 were redeemed to 31st Dec., 2017. Interest on debentures has been paid regularly.
Solution 70
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q71. Prepare a Cash Flow Statement from the following Balance Sheet:

Additional Information:-
(i) An old machinery having book value of Rs. 42,000 was sold for Rs. 56,000.
(ii) Depreciation provided on machinery during the year was Rs. 28,000.
Solution 71
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Q72.Following are the Balance Sheets of ‘X’ Co. Ltd:-

A machine costing Rs. 40,000 having book value of Rs. 25,000 was sold for Rs. 35,000 during the year. Interest paid on loan from bank amounted to Rs. 8,000. Prepare a Cash-Flow Statement.
Solution 72
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q73.From the following information, prepare a Cash-Flow Statement:-

Solution 73
Cash Flows from Operating Activities for the year ended 31st March, 2018

Q74.From the following information’s, Prepare a cash-flow statement:

Solution 74
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q75. Following is the Balance Sheet of Solar Power Ltd. as at 31-03-2014:-

Notes to Accounts:-

Additional Information:-
During the year a piece of machinery costing Rs. 48,000 on which accumulated depreciation was Rs. 32,000 was sold for Rs. 12,000.
Prepare Cash Flow Statement.
Solution 75
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q76. From the following Balance Sheets EE Ltd. as at 31.03.2018 and 31.03,2017 prepare a Cash Flow Statement:

Additional Information:-
(i) During the year machine costing Rs. 50,000 was sold for Rs. 15,000.
(ii) Interim dividend paid on equity share capital Rs. 20,000.
During the year machine costing Rs. 50,000 was sold for Rs. 15,000 and dividend paid Rs. 20,000.
Solution 76
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Q77. From the following Balance Sheet of Samta Ltd. 31.03.2018 and 31.02.2017 prepare a Cash Flow Statement:

(ii) During the year Rs. 80,000 depreciation was charged on fixed tangible assets.
(iii) A piece of machinery included in fixed tangible assets costing Rs. 20,000 on which depreciation charged was Rs. 8,000 was sold for Rs. 10,000.
Solution 77
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Q78. From the following Balance Sheets, prepare a Cash Flow Statement as per AS-3 (revised):

A dividend of Rs. 30,000 was paid during the year 2017-18.
Solution 78
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q79. From the following Balance Sheets of B.C.R. Ltd. as at 31.03.2018 and 31.03.2017 prepare a cash flow statement:

Additional Information:-
(i) Proposed Dividend for the year ended 31st March 2018 was 12% and for the year ended 31st March, 2017 was 10%.
(ii) During the year Equipment costing Rs. 1,00,000 was purchased, Loss on sale of Equipment amounted to Rs. 12,000. Rs. 18,000 depreciation was charged on Equipment.
Solution 79
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Q80. Prepare a Cash-Flow Statement from the Balance Sheets given below:-

Additional Information:-
(i) Depreciation written off on fixed assets @ 10% on last year’s balance.
(ii) Interim Dividend paid during the year @ 10% on share capital.
(iii) Mortgage Loan was taken on 1st July 2017 @ 10% p.a. Interest has been paid upto date.
Solution 80
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Q81. Following are the Balance Sheets of X Ltd:-

Additional Information:-
(i) A piece of machinery was sold for Rs. 8,000 during the year 2018. Its original cost was Rs. 20,000 and depreciation of Rs. 15,000 has been provided on it.
(ii) Non-Current Investments were sold at a loss of 40%.
(iii) Land was sold for Rs. 1,50,000.
(iv) Interest paid on public deposits amounted to Rs. 6,000.
You are required to prepare Cash-Flow Statement.
Solution 81
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Q82. From the following Balance Sheets of Godrej Ltd. you are required to prepare Cash Flow Statement.

Additional Information:-
(i) Machinery whose original cost was Rs. 50,000 (accumulate depreciation thereon being Rs. 32,000) was sold for Rs. 10,000.
(ii) Depreciation on machinery charged during the year was Rs. 25,000.
(iii) Non-Current Investments costing Rs. 20,000 were sold for Rs. 32,000 during the year.
(iv) Interest paid on long-term borrowings amounted to Rs. 3,000.
Solution 82
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Point for Students:-
Financing activities are the activities that result in change in capital and borrowings of the enterprise. Some Examples of cash flow arising from financing activities are:
a) Cash receipts from issuing shares or other similar instruments.
b) Cash receipts from issuing debentures, loans, bonds and other short term or long term borrowings.
c) Cash Payment for Buy-back of equity shares.
d) Cash repayment of the Rs. borrowed including redemption of debentures, bonds, preference shares etc.
e) Cash Payments of dividends both on preference and equity shares.
f) Cash payments for interest on debentures and loans.

Q83. Following are the Balance Sheets of Pawan Ltd:-

Additional Information:-
(i) Machinery Costing Rs. 60,000 was sold for Rs. 18,000 during the year.
(ii) Interim Dividend paid during the year Rs. 25,000.
(iii) During the year Company sold 40% of its original non-current investments at a loss of 20%.
You are required to prepare Cash-flow Statement.
Solution 83
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:

Q84. You are required to prepare Cash-Flow Statement from the following information’s:-

Balance Sheet
as at 31st March 2018 and 2017

Solution 84
Cash Flows from Operating Activities for the year ended 31st March, 2018

Working Note:-
(1) Calculation of Net Profit before Tax:
Net Profit before Tax = Operating Profit + Dividend Paid
Net Profit before Tax = 1,040 + 7,000
Net Profit before Tax = 8040

Calculation of Operating Profit:-
Operating Profit = Profit and Loss Balance for Current Year – Profit and Loss Balance Previous year
Operating Profit = 21,120 – 20,080
Operating Profit = 1,040

DK Goel Solutions Class 12th Chapter 6 Cash Flow Statements

What is a Cash Flow Statement?

A Cash Flow Statement can be defined as the statement that records the flow of incoming and outgoing cash within a business. The cash flow statements are one of the most efficient tools to calculate the liquidity and solvency of the firms. These statements allow determining the capacity of a firm to generate and employ the cash to generate fruitful outputs.

What are the merits of cash flow statements?

The merits of cash flow statements are as follows –
● Cash Flow Statements, when compiled with other important financial documents, helps the companies to analyze their assets. It helps them to track their stability, liquidity, and capability to handle cash.
● Cash Flow Statements allow the firms to evaluate the cash flowing through their business. It helps them to frame better strategies to utilize the funds. more effectively.

What are the different types of cash flow statements?

The inflow and outflow of cash within a business can be primarily classified into the following types –
● Cash flow generated through operating activities of the business
● Cash flow coming from investing activities
● Cash flow resulting from financial activities

What are the objectives of Cash Flow Statements?

Here are the primary objectives of cash flow statements –
● To help businesses frame short-term financial plans.
● To design beneficial business policies.
● To create a practical cash budget and promote cash management.
● To help companies utilize the cash in the best way possible to generate incredible results.

List down the limitations of Cash Flow Statements ?

The limitations of cash flow statements are as follows –
● It is designed on the basis of historical cost prices of products or services.
● It overlooks non-cash transactions.
● It is not designed under the basic accounting principles.
● It is framed on the basis of secondary data.

What is meant by financial activities and investing activities for creating the cash flow statements?

Financial Activities – These define the procedures that output in the change of capital of the firms.
Investing activities – It portrays the activities that include the cash-less acquisition or elimination of any long-term investments or assets of a business.

Also refer to TS Grewal Solutions for Class 12

DK Goel Solutions

DK Goel Solutions Chapter 6 Cash Flow Statements

Cash Flow Statements DK Goel Class 12 Accountancy Solutions

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