porteys estions ed ‘eoretical Qu ive the meaning of Cash Flo, 1 Statement, | Cash flow statement hight, inflo go Cash low state vet Mighlights the cash info (1)Cash flow statement provid @)A cash flow statement indic; from operating activities, inv Ss information about the cash flows (inflows and outflows) of an enterprise. ates historical chan sti nges in cash and cash equivalents by classifying the cash flows om oper ing activities and financing activities. 3. Give any two Advantages/Importance of Cash Flow Statement, ns. Main advantages of Cash Flow Statement are - () Helpful in assessing the ‘Solvency and Liquidity’: Cash flow statement indicates the liquidity and solveney flow staterrse. also indicates the ability of an enterprise to generate cash and each equivalents. Cash othe bectnat as helpful in assessing the solvency of an enterprise and ability to uilive hose cock fear for the business operations. () Helpful in short-term planning: Information provided by the cash flow statement is helpful in short-term planning. On the basis of cash fl low statement an enterprise can plan its short term requirements. Give any two limitations of Cash Flow Statement, [Link] main limitations of Cash Flow Statement are « (Affect of window dressing : Sometimes fi of window dressing true cash position cann ‘manipulated easily by the accountant. (2)Non-cash transactions are ignored: Non-cash transactions are not recorded in the book: Play important role in ascertaining the solvency and liquidity of an enterprise. 5. Define Operating, Investing and Financing Activities. Ans. Operating Activities : Operating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities. Investing Activities : Investing activities are the acquisition and disp. not included in cash equivalents. Financing Activities : Financing activities are acti the owners’ capital (including preference share enterprise. 6. What do you mean by Cash and Cash Equivalents ? ins. Cash Equivalents are highly liquid assets or high! a very short period (not more than 3 months). Cash : (i) Cash in hand (if) Cash at bank Cash Equivalents : (@ Cheques in hand, (ii) Drafts in hand, (ii) Marketable Securities (short-term), (») Commercial bills, (vi) Commercial papers, (vii) Treasury bills igures presented in accounting form are not true and fair. Because Wot be ascertained, Through window dressing cash balance can be S of accounts but they sal of long-term assets and other investments vities that result in changes in the size and composition of capital in the case of a company) and borrowings of the ly liquid investments which can be converted into cash within (iv) Short-term deposits, 363Ans, 10. Ans, Mu. Ans. 2. Ans, 1B. Ans, 14. Ans. 15, Ans. 16. Ans. 17. Ans. 18. Ans, 19. Ans, 20. Ans, 21. Ans, 22, Ans. | VINES Trg Acai i State whether the payment of cash {o creditors will result in ine nite or no flow of cash, i editors will reduce the cash balance so itis outflow of cash. Fiat ne ference between operating activity and an investing activity? (CBSE Moan, Operating activities are the prineipal revenue producing activities of a company and Investing activi’ 2 concerned with the long term assets. ; A What is the difference between operating activity and financing activity? a Operating activites are the prinipal revenue proxlucing activities of a company and financing actiyigg concerned with the Shareholders’ funds and borrowings (short term and long term). ‘Why cash flow statement is not a substitute for income statement ? (CBSE Moai, Cash flow statement is used to assess the cash inflows and outflows only. It does not calculate profit gp los gy a company that's why itis not a substitute for income statement SS he Interest recived Dy a finance company is casi under which kind of ctvity while preparing gy flow statement ? 7 For a financial company all financial activities are considered as operating act finance company is operating activity. | Gnder which type of activity will you classify ‘Cash Receipts from Debtors’ while preparing Cash py, Statement ? Cash received from debtors will be treated shown under ‘Operating Acti to the customers and receiving cash is operating activity of a business. List any two investing activities which result into outflow of cash. (O Purchase of Fixed assets (Tangible or Intangible) (i) Purchase of investments Name any two financing activities that will result into inflow of cash. (O_Issue of Shares or debentures (i) Long term borrowings (raised loan from bank or from other financial institutions) ‘What are two major inflows and two major outflows of cash from investing activities? Two major inflows and outflows from investing activities are : What is the es, lmterest received jy a Inflows from investing activities Outflows from investing activities 1. Sale of fixed assets 1. Fixed assets purchased 2. Sale of investments 2. Investments purchased List any two financing activities that will result into outflow of cash. ( Redemption of debentures (i) Dividend paid Redemption of debentures would result in inflow, outflow or no flow of cash, Redemption of debentures would result in cash outflow will be shown under financing activities, Sale of marketable securities at par would result in inflow, outflow or no flow of cash. Sale of marketable securities at par will result in no flow of cash, Why non-cash transactions are ignored while preparing cash flow statement 2 Cash flow statement is prepared to record the cash transactions only. Non-cash transactions do not afte cash and cash equivalents that’s why they are ignored while preparing cash flow statemey Under which type of activity will you classy ‘Sale of shares of another company! while preparing cash flow statement ? Sale of shares of another company is treated as investment. While Preparing cash flow statement it is clasiid under investing activity. When is interest received considered as financing activity? ‘When a company receives interest on 'Calls in arrear' itis Classified under the financing activity. How would you classify the dividend paid by the finance company and dividend paid by the manufacturing company ? y paid by (© Dividend paid by a finance company is classified as Financing Activity (ii) Dividend paid by a manufacturing company is classified as Financing ActivityAto Soemets 3S = 5 OFKers would result in inflow, outflow or no flow of cash. Give answers with .. Cash paid to workers as g a 4 OF cash. ‘laries will reduce the cash balance or cash and cash equivalents, So itis outflow 4, What is the treatment of Incre ns: Inerease in Provision fo operating activities, 4g, State how Cash Flow Staten Cash flow statement is " As ow statements are histories oa aay of Statement of profit and loss and Balance Sheet, that's why cash 26, Clasify the following into Operating, (a) Issue of Debentures of & 5,00,000 (©) Interest on loan paid by a trading firm & 1,00,000 (©) Receipt of interest by a company 25,000 Ans. (@) Issue of debentures of & $,00,000 is Financing Activity (0) Interest on loan paid is Financing Activity (©) Receipt of interest is Investing Activity 27, Mention the net amount of ‘Source’ or ‘Use’ of ing : ecarmiereear se” of cash from the following : 000 against ha 22.00 ‘gainst purchase of business comprising of fixed assets € 7,00,000, Current Le 000 and took over Current liabilities at % 1,00,000. ns, No Source o use of cash, because this transaction does not involve cash (inflow/outflow). 28, State With reason whether the issue of 9% debentures to the vendor for the purchase of a Machinery of 750,000 will result in inflow, outflow or no flow of cash. Ans. No flow of cash. 29, Old Computer (Book value % 3,000 source or cash in this case ? Ans. Nil, because this transaction does not involve any cash. 30. Classify the following into cash inflows from inves Cash Flow Statement : (@) Sale of Fixed Assets (©) Interest Received (©) Redemption of Debentures (@) Receipt of Dividend Ans, (a) Investing Activities (b) Investing Activities (@) Investing Activities ‘ase in Provision for doubtful debts? doubtful debts will be added back to the profit while calculating cash flow from ments are historical in nature. Investing or Financing Activities: ) was completely written off from the books. What is the amount of sting activities/financing activities while preparing a 31, Classify the following into Cash flow from : ( Operating activities (i Investing activities and (ii) Financing activities while preparing a cash flow statement: (@) Interest Paid () Purchase of Equipments (c) Payment of Tax (d) Purchase of Machinery Ans. (a) Financing Activities (®) Investing Activiti (© Operating Activities (@) Investing Activities 32. The accountant of Manav Ltd. while preparing Cash Flow Statement added depreciation provided on fixed assets to net profit for calculating cash flow from operating activities. Was he correct in doing so? Give reason. Ans. Yes, Accountant is correct, earlier depreciation was deducted from the net profit in Statement of Profit & Loss. Depreciation is a non cash expense, hence, it should be added back while preparing cash flow statement, While preparing Cash Flow Statement, the accountant of Rachana Ltd., a finance company, included ‘Interest received on loan’ in financing activities. Was he correct in doing so ? Give Reason. Ans, No, Accountant was wrong in his approach of showing interest received on loan under the ‘Financing Ac ies’,es 34. Ans, 35. Ans. 36. Ans. 37. s ae ae = Ans. 45, Ans, 47. Ans, . Give any two examples of Cash Flow from Operating Activ - (@ Purchase of goods in cash (outflow) (ii) Sold goods in Cash (inflow) - Cash flow from Financing Acti VINESH Tage lence, interest received 4 in work of financing companies is to lend or borrow funds. Hi ya ta ‘The main Sassified as cash flow from operating activities. fam Ltd, a finance compe company eparing Cash Flow Statement, the accountant hol Get correct in doing so? Give Rew? og ile pre ivity. Was . Dilaend received on investments as investing ae sere aired on intestments uae “= i approach of showi . Hence, dividend re, Fee he mala oct of isseel 1g companies is to lend or borrow funds. Teceiveg ies". The 1 capactivitien freance company is classified as eash flow from operating activities in i invested. € 30,00,000 i shares and ¢ 49 ; is carrying on a Mutual Fund business. It inves ie ates an 1s, I acinaeurey of jatlous cuinneniee tat ng the year. It received 3,00,00 ier 0 cut eash flows from investing activities. Cash flows from investing activities - Nil Normally, what should be the maturity to be qualified as Cash Equivalents ? faeces Maturity period of a short-term investment should be 3 months from the thea tai, considered as Cash Equivalents Whether the following statement is True or False: y y wi ing activity’ ‘Patents purchased by a company will be an operating ac 3 eubieie : Statement is false because patents purchased by a company will be an investing ity. Patent js fing ible tt. intangible asset [CBSE 2919 Ya period for a short-term investment from the date of its HU mn Under which type of activity will you classify ‘Cash advances and Loans made to third ary yi preparing Cash Flow Statement ? Investing Activity pined Ltd. redeemed & 2,50,000, 11% Debentures at 10% premium, What will be the Amount of Cay Flow from Financing Activities! other than interest ? ties = 2,50,000 + 25,000 State giving reason, whether issue of shares for consideration other than cash Will result into into, outflow or no flow of cash. IcBsE No flow of cash because issue of shares generated no cash for the company. Payment of Dividend and Interest will be classified as which type of activity while preparing Cash Foy Statement ? Financing Activities State with reason, whether ‘Discount received on making payment to Suppliers' would result into inflow, outflow or no flow of cash. - No flow of cash because it does not involve cash On Ist October, 2020, Vinod Ltd., issued 20,000, 9% Debentures of % 100 each and Paid interest of © 0,000 on these Debentures on 31st March 2021. Calculate the Cash Flow from Financing Activities for the period ending 31st March 2021, [CBSE] 20,00,000 - 90,000 Interest paid = 19,10,000 Sale of Marketable Securities at Par’ would result in inflow of cash. State whether the statement is Toe or False, ICBSE] False because it will lead no change in cash and cash equivalents, and cash equivalents, Vinod Ltd. is a non-financing company; it has Presented [Link] Cash Flow Statema Tewill be part of Investing Activites (Add while Preparing cash flow statement) received a dividend of = 40,000 on shares. How willit be nt ?how Satements "4g, When can ‘Receipt of Dividend’ a son in support Ocal tasers be classified as an Operating Activity? State, also give reas pos. i is Operating oy for a finance company because it is a principal revenue producing a i Give 49. Does movement between items that consti Equivalents result into Cash Flow? reason in support of your fae: -onstitute Cash or Cash Equivalent ns, There are some transactions which represent movement between items of Cash or Cash Equivalents but they do not result in Cash Flow because increase in one asset and decrease in other asset of the same nature. 0; M Ltd. a finance company, had advanced a loan of € 3,00,000, invested & 6,00,000 in shares of the other company and purchased a machinery for € 9,00,000. It received dividend of 70,000 on investment in shares. The company sold an old machine of the book value of & 79,000 at a loss of € 10,000. Compute cash flow from investing activities, ns. 69,000 sale of machinery - Purchase of Machinery 9,00,000 = 8,31,000 cash used in investing activities. gi. Loans and advances granted by a company will be considered as which type of activity while preparing Cash Flow Statement. is ns. Investing Acti §2, Net increase in Working Capital other than Cash and Cash Equivalents will increase, decrease or not change Cash Flow from Operating Activities. Give reason in support of your answer. Ans. Net increase in Working Capital indicates that more cash is invested in the Working Capital and thus decreases Cash Flow from Operating Activities. pee CCREL eat y stra ORO eis Cg 33. Following Extracted information of Vinod Ltd. is available on 31st March 2021: ies Particulars 2021 2020 Surplus i.e. Statement of Profit and Loss 3,80,000 (50,000) Provision for Tax 75,000 50,000 Provision for Doubtful Debts 15,000 = Additional Information : Proposed Dividend for the year 2020 and 2021 was Rs.40,000 and Rs.50,000. Find out Cash Flow from Operating Activities. Ans. Cash Flow from Operating Activities 510,000 54, Following Extracted information of Vinod Ltd. is available on 31st March 2021: Particulars 2021 2020 Provision for Tax 1,00,000 150,000 Additional Information : Provision for tax made during the year Rs.1,55,000. How much tax is paid by Vinod Ltd. during the year? Ans. Tax Paid Rs.2,05,000 58. Following Extracted information of Vinod Ltd. is available on 31st March 2021: Particulars 2021 2020 Provision for Tax 1,00,000 1,50,000 Additional Information: Tax paid during the year Rs-1,40,000, How much Provision for Tax made by Vinod Ltd. during the year? Ans, Provision for Tax made Rs. 90,000x a UINESH Target Aca 56. Following Extracted information of od Ltd. is available on 31st March 2021 : 2021 Particulars 2029 '8,00,000. 5.00, Equity Share Capital = 00a 00,009 10% Redeemable Preference Share Capital Pye 2,00,009 General Reserve 20,000 ~ ‘Workmen Compensation Reserve oe 10,009 Surplus i.e. Balance in Statement of Profit and Loss ao 2,10°009 Provision for Tax on 70,000 Debtors 1,80, 2,00,009 — Additional Information : Provision made for tax during the year Rs.30,000. Find out Cash flow from Operating Activities. ‘Ans. Cash flow from Operating Activities Rs.2,30,000. 57. Following Extracted information of Vinod Ltd. is available on 31st March 2021: Particulars 2021 2020 Machinery (at cost) 5,00,000 3,00,000 Accumulated Depreciation 50,000 30,000 Additional Information: During the year, a machine costing Rs.60,000 with its accumulated depreciation of Rs.10,000 was sold at 20% loss. Find out Cash Flow from Investing Activities. Ans. Cash used in Investing Activities (Rs.2,20,000) 58. Following Extracted information of Vinod Ltd. is available on 31st March 2021: Particulars 2021 2020 10% Non-current Investment 4,00,000 3,00,000 Additional Information : 60% of the investment held in the beginning of the year were sold at a gain investment at the end of the year 31st March 2021 Rs.35,000. Find out Cash Flow from Investing Activities. of 20%. Interest received on Ans. Cash used in Investing Activities (Rs.29,000) 59. Following Extracted information of Vinod Ltd. is available on 31st March 2021 : Particulars 2021 2020 Share Capital 5,00,000 3,00,000 Securities Premium 30.000 a Bank Overdraft at the rate of 8% p.a. 1,20,000 a Additional Information : Bank overdraft was availed on Ist December 2020. Interest on Bank overdraft was paid on 31st March 202) Find out the Cash flow from Financing Activities. Ans. Cash flow from Financing Activities Rs.3,66,800. 60, _ Following Extracted information of Vinod Ltd. is available on 31st March 2021: Particulars 2021 2020 1. Long-term Borrowings 10% Debentures 4,00,000 2. Short-term Borrowings 7,00,000 10% Debentures Current Maturities 2,00,000_piestoements Vie! Information : Fresh Debentures were issu ° with interest. ed on Ist October 2020 and debentures were redeemed on 31st December 2 Find out the Cash flow from Fi 1 inancing Activiti alae ‘inancing Activities. Cash flow from Financing Activities Rs.30,000 UR otIteMepUristncel Question. 1 “cash flow statement is to be prepared as {@ Accounting Standard 2 (Revised) oe (©) Accounting Standard 4 (Revised) 369° (b) Accounting Standard 3 (Revised) (d) Accounting Standard 26 (Revised) Question. 2 “Which of the following is an objective of Cash flow 1 statement (a) To Ascertain the source of cash and cash equivalents (6) To Ascertain the application of cash and Cash Equivalent (© To Ascertain the net change in cash and cash equiva (d) All of the Above oo Question. 3 ee Which of the following is not a limitation of Cash flow statement (@) Window dressing (®) Ignore Non-cash transaction (c) Historical in nature (d) Efficient cash management Question. 4 ee Which of the following statement is true (@) If the amount of goodwill is increased during the current year, the difference is treated as purchase of goodwill (©) If the amount of goodwill is decreased during the current year, it wil be treated as sale of goodwill (©) Dividend paid by a Real estate company is g Activities (@ Marketable Securities are part of Financing Activities Question. 5 TEE Which of the following is not considered as cash and cash equivalents ? (@) Short term deposit in bank () Commercial Paper (©) Certificate of deposit (@) Bank overdraft Question. 6 ee Which of the following item is considered as Cash Equivalents ? (a) Marketable securities (b) Cash Credit (©) Debtors (@ Bills receivable Question. 7 a ———e—eaeaeSSsS$Ss0sSsSSSs$“\>$ 5 a ae Fs Following is the Balance Sheet of Vinod L Ltd. as on 31st March, 2021. particulary [Note No. [31.3.2021 @) | _31.3.2020 @ Equity and Liabilities Shareholder's Funds: (a) Share Capital 60,00,000 45,00,000 (H) Reserve and Surplus 15,00,000 9,00,000 Non-Current Liabilities: Long-Term Borrowings (10% Debentures) 9,00,000 6,00,000 Current Liabilit (a) Trade Payables 4,50,000 6,00,000 (&) Short-term Provisions (Tax) 2,10,000 1,80,000 Total 90,60,000 67,80,000 Assets : i Non-Current Assets : (@) Property, Plant and Equipment and Intangible Assets ;| (@) Tangible Assets 57,00,000 45,00,000 (&) Intangible (Computer Software) 14,10,000 8,10,000 Current Assets: (@) Inventories 7,50,000 4,80,000 (®) Trade Receivables 6,30,000 6,30,000 (©) Cash and Cash equivatents : 5,70,000 360,000 Total 90,60,000 67,80,000 Prepare a Cash Flow Statement after taking into account the following adjustment: (During the year, a piece of machinery costing € 80,000 on which depreciation was € 60,000, was sold for 18,000. Total depreciation charged during the year Rs.2,80,000. (i) Tax paid during the year & 60,000. (iii) Debentures were issued on 1st July 2020. Solution. Cash Flow Statement Particulars ‘Amount Cash Flow from Operating Acti Profit before tax 6,00,000 + 90,000 Tax Provision 6,90,000, Add: Loss on Sale of machinery 2,000 Depreciation 2,80,000 Interest on Debentures 82,500 Operating Profit before Working capital changes 10,54,500 Less : Trade Payable (1,50,000) Inventories 270,000) Cash generated from operating activities before tax 634,500 Less : Tax paid 60,000 Cash Inflow from operating activities 5,74,500~ VINESH Target Accontone > 404 Particulars Amount Cash Flow from Investing Activities Computer Software ew) Machinery (purchase) 00,000) Machinery (sale) 1 |__18.000 | Cash Outflow (used) in Investing Activities 20,82, 000) Particulars ‘Amount Cash Flow from Financing Activities Share Capital 15,00,000 Debentures 3,00,000 Interest on Debentures (82,500) ‘i -——_| Cash Inflow from Financing Activities T7AT500 Particulars ‘Amount Cash flow from operating activities 5,74,500 Cash used in Investing activities (20,82,000) Cash flow from financing activities |__17.17.500_| Total 2,10,000 Add: Opening cash and cash equivalents 3,60,000 Closing cash and cash equivalents 5,70,000 [3 Following is the Balance Sheet of Solar Power Ltd. as at 31,3.2021 Solar Power Ltd. Balance Sheet Particular Note No. [31.3.2021 @) | _31.3.2020 @ 1. | Equity and 1. | Shareholder's Funds: (a) Share Capital 24,00,000 22,00,000 () Reserve and Surplus 1 6,00,000 “4,00,000 2. | Non-Current Liabi Long-Term Borrowings (6% p.a. Loan) 4,80,000 3,40,000 3. | Current Liabil (@) Trade Payables 3,58,000 4,08,000 (®) Short-Term Provisions 1,00,000 1,54,000 Total 39,38,000 35,02,000 u. [Assets = 1. | Non-Current Assets = (@) Property, Plant and Equipment and Intangible Assets : (i Tangible Assets 2 21,40,000 17,00,000 (ii) Intangible Assets 3 80.000 724,000 2. | Current Assets : (@) Current Investments 4,80,000 3,00,000 () Inventories 2'58,000 242,000 (©) Trade Receivables 3740.00 286,000 (a) Cash and Cash equivalents 640,000 750,000 Total 39,38,000 35,02,000Y i (hflow ‘Statements 405 i 5No. | Particulars ( ‘As on 31,3,2021 ‘As on 31.3.2020 j Surplus (balance j | F7. | Reserves and Surpius i Statement of Profit and Loss) 6,00,000 ao! 2. | Tangible Assets Machinery 25,40,000 20,00,000 Less : Accumulated Depreciation (4,00,000) (3,00,000) || 3. [Tntangible Assets Goodwill 80,000 2,24,000 | additional Information: Dut sold for Rs 12,000. Loan R; prepare Cash Flow Stateme; Solution. -1,40,000 was taken at the end 31.3.2021. nt, Cash Flow Statement ane the year a piece of machinery costing % 48,000 on which accumulated depreciation was & 32,000 was s 12, . Particulars Detail ® A. Cash Flow from operating activities Net profit before tax 3,00,000 Add : Non operating expenses and losses Depreciation on machinery 1,32,000 Loss on sale of machinery 4,000 Goodwill written off 1,44,000 Interest on Loan 3,40,000 x 6/100 20,400 3,00,400 Operating profit be fore working capital changes 6,00,400 Inventories (16,000) Trade Receivables (54,000) Trade Payables (50,000) (1,20,000) Cash generated from operating activities 4,80,400 Less : Tax paid 54,000) Cash Inflow from operating activities 3.26.400 B. Cash Flow from investing activities Purchase of machinery (5,88,000) Sale of machinery 12,000 Cash Outflow (used) in investing activities (5,76,000) C. Cash flow from financing activities Issue of share capital 2,00,000 Borrowing of loan 1,40,000 Interest on Loan (20,400) 3,19,600 Cash Inflow from financing activities 3, 19,600 Net decrease in cash and cash equivalent 3,26,400-+(5,76,000) +3,19,600 70,000 ‘Add : Cash and cash equivalent in the beginning 7,50,000+3,00,000 10,50,000 Cash and cash equivalent at the [Link] year 6,40,000+4,80,000 11,20,00040g EST a 1S. From the along norman cleat the amount fess fo ne * Particulars [31.03.2020 @)_—— im 8 Plant and Machinery 8,50,000 10,000 Non Current investments 40,000 10,000 Land (At cost) 200,000 - Additional Information : (i) Depreciation charged on Plant and Machinery was & 50,000 sit (i) Plant and Machinery witha book value of & 60,000 was sold for & 4s (ii) Land was sold at again of & 60,000. ; (6)_XYZ Ltd, provided the following information, aleulate net cash flows from financing Particulars 31.03.2020 sami 12,00,00 Equity Share Capital 10,00, 000 7 00,000 12% Long-term borrowing Debentures} _1,00,000 x Additional Information: (Interest paid on Debentures & 12,000 (ji) Dividend paid ® 50,000. ion. Cash Flow from Investing Activities Cash Flow from Investing Activities Machinery (purchase) Machinery (sale) Non-current Investment | Sale of Land | Cash Ouflow (used) in Investing Activites Cash Flow from Financing Activities Particulars Amount | ‘Cash Flow from Financing Activities | Proceeds from Share Capital 2,00,000 | Issue of Debentures 1,00,000 | Interest on Debentures (12,000) Dividend Paid (50,000) Cash Inflow from Financing Activities 238,000 15, From the following extracts of Vinod Limited, calculate forthe year ending 31st March, 2021 (i) Cash from Investing Activites (i) Cash from Financing Acti Particulars 3103-2021 313.2000, Equity Share Capital 15,00,000 12,00,000 Long-term Borrowings (10% Bank Loan) 60,000 1,00,000 Fixed Assets Plant and Machinery 6,15,000 375,000 Less : Accumulated Depreciation (1,35,000) (0,000) 4,80,000 285.0 ‘Non-current Investments 30,000 100,000 Land (at cost) 500,000 700,000 Computer Sofware 30,000 40,000 Copyrights 1,30,000 80,000a OC (pif ttements 407 ydisional Information: WN 40% oF loan amount and interest ¢ vas paid at the end of the financial year 2021 o During the year 2020-3 on loan was paid at the end of the fin y (a) Interim Dividend of & 17,099 i oi 000 was paid. ; Id at o During ie eg, * Mhine costing ® 60,000 with its accumulated depreciation of € 37,500 was sol (©) The company sold 70 Fit of 20% on its bor i Non-current investments which it held at the beginning of the year, ata Profit of 20% on its book value solutions Cash Flow from Investing Activities Particula Amount Cash Flow from Investing Activities sale of Machinery 27,000 Purchase of Machinery (3.00,000) Sale of Non-current Investment 84,000 sale of Land 2,00,000 Copyright purchased (50,000) | |” Cash used in Investing Activitics (39,000) | “Working Note: Plant and Machinery Account Particulars Amount | Particulars at To Balance bid 3,75,000 | By Bank A/c (sale) 27,000 To Gain on sale 4,500 | By Depreciation Ale 37,500 To Bank A/c (purchase) 3,00,000 | By Balance e/a 6,15,000 6.79,500 $.79.500, | Cash Flow from Financing Activi | Particular Amount | | Cash Flow from Financing Activities | Proceeds from Share Capital 3,00,000 Bank Loan (40,000) Interest on Loan (10,000) Dividend Paid (17,000) Cash Inflow from Financing Activities 233,000 16, Following is the Balance Sheet of Vinod Power Ltd. as at 31.3.2021 7 Particulars NoteNo. | 31.3.2021@ | 31.3.2020@ 1. Equity and Liabilities 1. Shareholder's Funds: (@) Share Capital 8,50,000 7,00,000 (b) Reserve and Surplus 1 2,00,000 2,50,000 [2 Non-Current Liabilities : || Long-Term Borrowings : Debentures 3,60,000 360,000 3. Current Liabilities : (@) Short-term Borrowings - Bank Overdraft 40,000 20,000 (b) Trade Payables 1,00,000 150,000 (c) Other Current Liabilities - Expenses due 20,000 = (®) Short-Term Provisions - Provision for tax 80,000 50,000 Total 16,50,000, 15,30,000408 VINESH Tet Acuna i [USB Assets ; jane Ae Umno Gee] 1, Non-Current Assets: (@ Property, Plant and Equipment and Intangible Assets = 7 on a (® Tangible Assets 175,000 250-000 Gi) Imangible:(Computer Software) 00/000 ae (6) Non-current Investment , 2. Current Assets > 50,000 (@) Current Investments Ga Go aoe (b) Inventori 1,50,000 120°000 (c) Trade Receivables oon 20, (@ Cash and Cash equivalents . 30,000 Total 16,50,000_ 15,30,000 Notes to Accounts ‘[Link]. | Particulars As on 31.3.2021 As on 31.3.2020 1. Reserves and Surplus General Reserve 50,000 = Surplus (balance in Statement of Profit and Loss) 1,50,000, 2,50,000 2. | Tangible Assets Plant & Machinery (at cost) 11,00,000 10,00,000 Less: Accumulated Depreciation (275,000) (2,50,000) 8,25,000 7,50,000 Additional Information : 60,000) was sold for € 50,000. (c) Tax paid during the year % 30,000. Prepare Cash Flow Statement. Solution. (@) Non-current investment costing & 10,000 were sold for % 14,000 during the year. (®) During the year a machine costing % 1,00,000 (Accumulated Depreciation on the same machinery was % Cash Flow Statement Particulars Details © Amt. @ (A) Cash Flow from Operating Activities Profit before tax & extraordinary items 10,000 Add : Depreciation on Plant & Machinery 85,000 ‘Add : Amortisation Computer Software 75,000 Less : Gain on Sale of Machinery (10,000) Less : Gain on Sale of Non-current Investment (4,000) Operating Profit before working capital changes 1,56,000 Less : Increase in Inventories (20,000) Less : Increase in Trade Receivables (0,000) Less : Decrease in Trade Payables (50,000) Add : Increase in other current liabilities, 20,000. Cash Generated (before tax) 76,000 Less : Tax Paid (30,000) Cash Inflow from Operating Activities 46,000| 1 r (gaflw ttements (—_@) Cash Flow trom Investing Aciivics Sale of Machinery eaaaa Sale of Non-current Investment ae Machinery Purchased faisnicaar Purchase of Non-current Investment oe (2,56,000) Cash outflow/used in Investing Activities (©) Cash Flow from Financing Activities Issue of Share Capital 1,50,000 Increase in bank overdraft 20000 170,000 Cash Inflow from Financing Activities 7 Net Increase in Cash & Cash Equivalents (A+ BF ©) (40,000) Add: Opening balance of Cash & Cash Equivalents Current Investments 1,10,000 Cash & Cash Equivalents 30,000 1,40,000 Closing balance of Cash & Cash Equivalents 1,00,000 {Corrent Investment $0,000 + Cash & Cash Equivalents 50,000) Working Notes = Calculation of Profit/Loss : General Reserve 50,000 Statement of P/L (1,00,000) Provision for Tax ( See Provision for Tax Ale) 60,000 Plant & Machinery Account Particulars Amount | Particulars Amount To Balance b/d 10,00,000 |" By Bank A/e (Sale) 50,000 To Gain on Sale 10,000 | By Accumulated Dep. A/c 60,000 To Bank A/c (Bal. fig. purchase) 2,00,000 | By Balance c/d 11,00,000 12, 10,000 12,10,000 Accumulated Depreciation Account Particulars Amount [ Particulars ‘Amount To Plant & Machinery Ave 60,000 | By Balance b/a 2,50,000 (Dep. on sold machine) By Depreciation A/c 85,000 To Balance c/d 2,75,000 | (Bal. fig. Statement of P/L, 3,35,000 3,35,000 Provision for Tax Account Particulars Amount | Particulars ‘Amount To Bank A/c (Tax paid) 30,000 | By Balance b/d ‘50,000 | To Balance cid 80,000 | By Statement of P/L, 60,000 (Bal. fig. provision) 1,10,000 1,10,000a0 VINESH Target Accountancy yi Non-current Investment Account = Particulars Amount | Particulars fount ToHane bal 790,000 | By Bank Ale (Sale) a nae ‘To Gain on Sale 4,000 | By Balance e/d +00, To Bank A/c (Bal. fig. purchase) 1,20,000 [2,140007] 2,14,000 zeae q 31.3.2021 : ing Sheets of SK Limited as on 313.2020 and = 17. Following ~ the Balance Sheets of GIN! 731,3.2021 (RS) 313.2020 ® Particular Equity and |. Shareholders’ Funds 1,40,000 ae i (a) Share Capital (64,000) (10,000) (b) Reserves and Surplus (Loss) 2. Non-current Liabilities 0 (@ Long-term Borrowings: 8% Debentures e008 40,000 3. Current Liabilities (a) Trade Payables (Creditors) aa en (b) Other Current Liabilities (Expenses due) . 000 Total 1,90,000 1,34,000 He Assets 1, Non-current Assets (a) Property, Plant and Equipment and Intangible Assets : (i Tangible Assets: Plant & Machinery 1,00,000 60,000 (®) Non-current Investments 28,000 40,000 2. Current Assets (a) Inventories (Stock) 20,000 10,000 (b) Trade Receivables (Debtors) 34,000 20,000 (0) Cash and Cash Equivalents 8,000 4,000 Total 1,90,000 1,34,000 Additional Information : (a) Included in the fixed assets was a piece of machinery costing & 14,000 on which depreciation charged was 8,000 and it was sold for % 6,000. During the year & 28,000 depreciation was charged on fixed assets. surrent investments costing % 12,000 were sold at a profit of 60%. nal Debentures were issued on Ist October 2020. Prepare Cash Flow Statement, Cash Flow Statement Solution. Particulars Detail Amount (A) Cash Flow from Operating Activities Loss during the year (54,000) Add : Depreciation on Plant & Machinery 28,000 Add: Interest on Debentures 4,800 Less: Gain on Sale of Non-current Investment (7,200) Operating loss before working capital changes (28,400)(gh Flow Stotements “a Add : Trade Payables oon Add: Expenses due rene Less: Inventories ee Less: Trade Receivables acre Cash Ouflow(used) in Operating Activities oe @) Cash Flow from Investing Activities Sale of Machinery wn Sale of Non-current Investment need Machinery Purchased ea Cash outflow/used in Investing Activities em (© Cash Flow from Financing Activities Issue of Share Capital oe Issue of Debentures Hen Increase on Debentures B80 Cash Inflow from Financing Activities — Net Increase in Cash & Cash Equivalents (A) B © Ao Add: Opening balance of Cash & Cash Equivalents — Closing balance of Cash & Cash Equivalents a 18. Prepare Cash Flow Statement for the following Balance Sheet of Vinod Limited: Particular Note No. |31.3.2021 (Rs) | 31.3.2020 (Rs) I. | Equity and Liabilities 1, | Shareholder's Funds : (@ Share Capital 10,00,000 8,00,000 (©) Reserve and Surplus 1 2,80,000 3,00,000 2. | Non-current Liabilities (@) Long-term Borrowings (12% Debentures) 4,00,000 2,50,000 3. | Current Liabilities : (@) Short term borrowings (Cash Credit) 60,000 - (b) Trade Payables 1,20,000 1,00,000 (©) Short-Term Provisions (Tax) 25,000 30,000 Total 18,85,000 14,80,000 0 [Assets : 1.|Non-Current Assets : (@) Property, Plant and Equipment and intangible Assets : (@ Tangible (Plant & Machinery) 9,00,000 7,00,000 (Gi) Intangible (Copyrights) 2,00,000 80,000 2.| Current Assets: @ Current Investments 1,20,000 1,50,000 (b) Trade Receivables 4,80,000 3,50,000 (©) Cash and Cash equivalents 1,85,000 2,00,000 Total 18,85,000 | _14,80,000AD VINESH Torget Accountancy Xi} Notes to Accounts 2021 [Link]. | Particulars zany 1. | _ Reserves and Surplus ang Securities Premium : a ‘000 3 Surplus i.e. Statement of P/L- 2,604 00,000 Additional Information : () Debentures were issued on Ist August 2020. i) 5% p.a. interest paid on Cash Credit during the (iii) Tax paid during the year & 20,000 | (is) During the year, a machinery costing ® 100,000 (Depreciation charged on that machinery till date 7 15,000) old at toss of 20%. Total depreciation charged on machinery ‘during the year & 90,000. Prepare Cash Flow Statement. year, Cash eredit was availed on Ist December 2020. Cash Flow Statement Solution. Particulars Details @ ‘Amt. @ (A)__ Cash Flow from Operating Activities Profit before tax 2,60,000 - 3,00,000 + Tax 15,000 (25,000) ‘Add; Depreciation on Plant & Machinery 90,000 ‘Add: Loss on sale of machinery 17,000 Add: Interest on Debentures 42,000 ‘Add : Interest on Cash Credit 1,000 Operating Profit before working capital changes 1,25,000 Add: Trade Payables 20,000 Less: Trade Receivables (130,000) Cash Generated (before tax) 15,000 Less: Tax Paid (20,000) Cash Outflow (used) in Operating Activities (6,000) (B) Cash Flow from Investing Activities Sale of Machinery 68,000 Machinery Purchased 3,75,000) Copyrights purchased (120,000) Cash Outflow (used) in Investing Activities (4,27,000) (C) Cash Flow from Financing Activities Issue of Share Capital 2,00,000 Securities Premium 20,000 Cash Credit 60,000 Issue of Debentures 1,50,000 Interest on Debentures (42,000) Interest on Cash Credit (1,000) Cash Inflow from Financing Acti 3,87,000 Net Increase in Cash & Cash Equivalents (A + B + C) (45,000) ‘Add; Opening balance of Cash & Cash Equivalents 3,50,000 Closing balance of Cash & Cash Equivalents 3,05,000| j | {ash Flow Statements 1. “43 Following information is provided by Vinod Limited as on 31.3.2022: Particulars ‘Note No] 31.3.2022 (Rs) | 31.3.2021 (Rs) Equity and Liabilities 1.| Shareholder's Funds: (@) Share Capital 19,00,000 17,00,000 (6) Reserve and Surplus 1 6,00,000 3,00,000 2, | Non-Current Liabilities : Long-Term Borrowings 2 5,00,000 4,00,000 3. | Current Liabilities ; @) Short term borrowings 3 70,000 1,758,000 ®) Trade Payables 1,00,000] —1,00,000 (© Short-Term Provisions 4 3,00,000} _1,65,000 Total 34,70,000 28,40,000 nt. [Assets = 1. Non-Current Assets + (@ Property, Plant and Equipment and Intangible Assets : (@ Tangible Assets 3] 24,00,000] —_19,00,000 (i Intangible Assets 6 2,00,000] _3,00,000 (©) Non-current Investment 3,00,000 2,00,000 2.| Current Assets : 3.| @) Current Investments 1,40,000 2,00,000 (6) Inventories 3,60,000, 2,00,000, (©) Cash and Cash equivalents 70,000 40,000 Total 34,70,000 28,40,000 Notes to Accounts [Link]. Particulars 2022 2021 1. Reserves and Surplus Surplus i.e. balance in Statement of P/L 6,00,000 3,00,000. 2. | Long-term Borrowings 12% Debentures 5,00,000 4,00,000. 3. Short-term Borrowings Bank overdraft 70,000 5,000 12% Debentures due for redemption- = 1,70,000 4, Short-term Provisions Provision for tax 3,00,000 1,65,000 ‘Tangible Assets Machinery 26,00,000 20,00,000 Less: Accumulated Depreciation (2,00,000) (1,00,000) 24,00,000 19,00,000 Intangible Assets Computer Software 2,00,000 3,00,000a4 \VINESH Target Accountany il Additionat Information : (@ Taterest on Debentures is paid on % 100,000 and debentures due for redemption 2021. 2 rng the yea, apiece of machinery costing € 80,000 on which assumulaied ocr sold at a gain of © 10,000. spreciation was & 40,000 was Solution. Cash Flow Statement Particulars Details “Amount 2 Cash flow from operating Activities Net profit before tax (W.N. 1) 6,00,000 (+) Depreciation 1,40,000, (+4) Interest on Debentures 60,000 + 10,200 70,200 (© Gain on sale of machinery (10,000) (+) Computer software amortised 1,00,000 Operating Profit before working capital change ‘9,00,200 (© Increase in inventory (160,000) Cash generated from operation 7,40,200 (© Tax Paid (65,000) Cash Inflow from operating activities 5,75,200 B : Cash flow from investing activities Purchase of Machine (6,80,000) Sale of Machine 50,000 Purchase of Non-current investment (4,00,000) ‘Cash Outflow (used) in Investing activities (730,000) C: Cash flow from financing Acti Issue of share capital 2,00,000 Issue of debentures 1,00,000 Bank overdraft 65,000 Redemption of Debentures (,70,000) Interest on Debentures (70,200) Cash Inflow from financing activities 1,24,800 D: Net decrease in cash & Cash equivalent (A+B+C) (0,000) Cash & Cash equivalent in the beginning 2,40,000 Cash & Cash equivalent in the End 2, 10,000 Working Note. 1 : Calculation of net profit before Tax pene 3,00,000 (4) Provision for tax (current year) 3,00,000 ‘Net profit before tax 6,00,000& (phon Semen f Pyne? Machinery Account aaa ‘Amount Lcd Amount | Particulars 000 To Balance b/d 20,00,000 | By Depreciation A/c aaa To Gain on sale Statement of Paty 10,000 | By Bank (Sale) ay To Bank (Purchase) 6,80,000 | By Balance e/d 26,00,000 100 26,90,000 BAe Wn.3? | Accumulated Depreciation Account | Particulars ‘Amount | Particulars Amount | To Machinery A/c 40,000 } By Balance b/d 1,00,000 To Balance c/d 2,00,000 | By Depreciation A/c (Current year) 1,40,000 2,40,000 2,40,000 20. Following was the Balance Sheet of Vinod Limived al on 31 3.2021 Particulars Note No. | 31.3.2021 (Rs) _ | 31.3.2020 (Rs) | 1,__Equity and Liabilities 1. Shareholder's Funds ; (a) Share Capital 250,000 2,00,000 (®) Reserve and Surplus 1 90,000 50,000 2. Current Liabilities : (@) Short term borrowings (Bank overdraft) ~ 10,000 (®) Trade Payables 20,000 15,000 (©) Other Current Liabilities 2 5,000 5,000 (@) Short-Term Provisions 25,000 20,000 Total 3,90,000 3,00,000 I, Assets : 1. Non-Current Assets : Property, Plant and Equipment and Intangible Assets : (i Tangible Assets 2,55,000 2,35,000 2. Current Assets : (@) Current Investments 30,000 = () Inventories 15,000 25,000 (©) Trade Receivables 40,000 10,000 (@) Cash and Cash equivalents 50,000 30,000 Total 3,90,000 3,00,000REE a aT VINESH Target Accountancy yi Notes to Accounts 021 2020] [Link]. [_ Particulars 1. | Reserves and Surplus 70,000 40,000 Surplus i.e., Balance in Statement ofProfit & Loss 30,000 10,000 Securities Premium 30,000 50,000 [90,000 _ 2. | Other Current Liabilities 1,000 5,000 Outstanding Expenses 4,000 = Unclaimed Dividend $000 3,000 ‘Additional Information : During the year 2020-21 (A tangible fixed asset costing € 50,000 was purchased. (ii) Tax paid & 15,000 (iii) Interest of € 1,000 was paid on the bank overdraft. (iv) Proposed Dividend for the year 2021 was % 5,000 and for the year 2020 was % 10,000. Solution. Cash Flow Statement Particulars Detail Amount ‘A. Cash Flow from Operating Activities Profit (70,000 - 40,000) 30,000 Add : Provision for Tax 20,000 ‘Add : Dividend 10,000 ‘Add : Interest 1,000 ‘Add: Depreciation 30,000 Operating profit before working capital changes 91,000 Add : Inventories 10,000 ‘Add: Trade Payables 5,000 Less : Outstanding Expenses (4,000) Less : Trade Receivables (30,000) Cash generated from Operations 72,000 Less: Tax (15,000) Cash Inflow from operating activities 57,000 B. Cash Flow from Investing Activities Purchase of asset (50,000) Cash Outflow (used) in Investing Activities (50,000) C. Cash Flow from Financing Activities Proceeds from issue of Shares 50,000 Securities Premium 10,000 Bank overdraft (10,000) Dividend 10,000 - 4,000 unclaimed (6,000) Interest on Bank overdraft (1,000) Cash Inflow from Financing Activities 43,000 D. Net increase in cash and cash equivalents (A+B-+C) 50,000) ‘Add : Opening cash and cash equivalents 30,000 E. Closing cash and cash equivalents 50,000+ 30,000 80,000