13.CASH FLOW STATEMENT XII CBSE ACCOUNTANCY

CASH FLOW STATEMENT

1. Cash Flow Statement

2. Introduction to cash flow statement Operating Activities Investing Activities Financing Activities Index Click On The Topic

3. Describes the Inflows (sources) and outflows(Uses) of cash and cash equivalents During a specified period. (As per AS-3) Cash Flow Statement

4. Objectives of cash flow statement Cash Management: Tool for short-term financial planning. By preparing the statement, a firm can know how much cash can be generated by its operations and how much cash is needed . Cash Planning: It helps in planning repayment of loans, dividend policy, replacement of fixed assets and capital budgeting decisions.

5. Answers to Difficult Questions: Explains the causes for financial difficulties. Even if the firm is profitable, firm experiences difficulty for cash Discloses Reasons for success or failure: Important technique for evaluating success or failure of cash planning. If the results are not as per expectation, reasons can be analyzed and corrective steps can be taken.

6. Operating Activities Revenue producing activities and generally result from the transactions and other events that determine the net profit or loss of the organisation

7. Cash Sales Cash Received From Debtors Cash Received From Commission And Fees Royalty Cash purchases Payment to creditors Cash operating expenses Payment of wages Income tax

8. Financing Activities Activities that result in changes in size and composition of owners’ capital and long-term debts of the firm.

9. Issue of shares in cash Issue of debentures in cash Long term borrowing Payment of loans Redemption of preferences shares Buy back of equity shares Payment of dividend Payment of interest

10. Investing Activities Investing activities relate to purchase and sale of long-term assets or fixed assets such as machinery, furniture, land and building and other investments

11. Sales of fixed assets Sales of investment Interest received Dividend received Purchase of fixed assets Purchase of investment

12. Cash And Cash Equivalent Short term, highly liquid investments that can be converted into known Amounts of cash within a reasonable period, without subjecting to any significant risk. Includes Cash Cash in hand Bank balance Short term investment Marketable securities

13. Identify the following items as:- Operating activities ,Investing activities, Financing activities, Cash & Cash equivalents Cash sales Cash received from trade receivables Purchase of building Sale of building Issue of share capital and debentures Buy back of equity shares Dividend paid Cash purchases Redemption of debentures Operating activities Operating activities Investing activities Financing activities Financing activities Financing activities Operating activities Financing activities Investing activities

14. Identify the following items as:- Operating activities ,Investing activities, Financing activities, Cash & Cash equivalents Purchase of goodwill Sales of patents Short term deposit in a bank Commission received Rent paid Income tax paid Bank balance Office Expenses Investment in short term securities Investing activities Investing activities Cash equivalents Operating activities Operating activities Cash equivalents Operating activities Cash equivalents Operating activities

15. No Item For financing company For non financing company 1 2 3 4 Interest Received Dividend Received Interest Paid Dividend Paid Operating Activities Operating Activities Operating Activities Financing Activities Investing activities Investing activities Financing Activities Financing Activities Financial enterprises These firms like Mutual Funds, Banks , Investment companies has a main business of borrowing and advancing loans, buying and selling of shares, debentures, fixed deposits Non Financial enterprises Other than financial enterprises like firms deals in Manufacturing Of Garments, Steel , Real Estate etc.

16. Identify the following items as:- Operating activities ,Investing activities, Financing activities, Cash & Cash equivalents Income tax refund Interest received on investment by :- (a) Financial company(b) Non financial company Sale of investment by :- (a) Financial company (b) Non financial company Interest paid on debentures:- (a) Financial company (b) Non financial company Rent received by a company whose main business is :- (a) Real estate company (b) Manufacturing company Operating activities (a) Operating activities (b) Investing activities (a) Operating activities (b) Financing activities (a) Operating activities (b) Investing activities (a) Operating activities (b) Investing activities

17. When does the cash flow arises Inflow Of cash Outflow Of Cash Transactions result in either increase/decrease in cash equivalent

18. State which of the following transactions will result in inflow/outflow or change in cash or cash equivalent Purchase of inventory for cash Purchase of goods on credit Sale of goods costing Rs 10,000 for Rs 12000 for cash Sales of goods on credit Purchase of a fixed asset by issue of shares PROBLEM Outflow of cash No effect Inflow of cash No effect No effect SOLUTION

19. State which of the following transactions will result in inflow/outflow or change in cash or cash equivalent Sale of fixed assets ( book value Rs 15000) at a loss of Rs 5000 Cash received from debtors Rs 90,000 and allowed him discount of Rs 1000 Shares issue for cash Issue of fully paid bonus shares Depreciation on furniture PROBLEM Inflow of cash Inflow of cash Inflow of cash No effect No effect SOLUTION

20. State which of the following transactions will result in inflow/outflow or change in cash or cash equivalent Purchase of patents Issue of debenture for the purchase of machinery Declaration of final dividend Cash withdrawn from bank Purchase of marketable securities of cash PROBLEM Outflow cash No effect No effect No effect No effect SOLUTION

21. Particulars Amount Format Of Cash flow statement Net Cash from (or used) in Investing Activities Cash Flows from Investing Activities Net Cash from (or used) in Financing Activities Cash Flows from Financing Activities Net Increase (or Decrease) in Cash & Cash Equivalents (X+Y+Z) Add : Cash and Cash Equivalents in the beginning Cash and cash Equivalents at the end of the year Cash Flows from Operating Activities Cash Generated from operations activities

22. Cash flow from operating activities

23. Particulars Amount Format Of from operating activities Add: Depreciation Preliminary Expenses/Discount on issue of Share and Deb written off Goodwill, Patents and Trademarks amortized Interest on long-term borrowings Loss on Sale of Fixed Assets Less: Interest Income Dividend Income Rental Income Profit on sale of Fixed Assets Operating Profit before Working Capital Changes Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Cash Generated from operations Less: Income Tax Paid (Previous year) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: A, Cash Flows from Operating Activities Net Cash Flows from/Used in operating activities

24. Particulars Amount Format Of Cash from operating activities Add: Depreciation Preliminary Expenses/Discount on issue of Share and Deb written off Goodwill, Patents and Trademarks amortized Interest on long-term borrowings Loss on Sale of Fixed Assets Less: Interest Income Dividend Income Rental Income Profit on sale of Fixed Assets Operating Profit before Working Capital Changes Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Cash Generated from operations Less: Income Tax Paid (Previous year) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: A, Cash Flows from Operating Activities Net Cash Flows from/Used in operating activities

25. Particulars Amount Calculation of Net Profit before Tax and Extraordinary Item. Add: - Transfer to reserves Proposed dividend for Current Year – Provision for tax made during the current year Net Profit of the current year (after appropriations) Less: - Refund of tax Net profit before tax Transfer to reserves Proposed dividend for Current Year – Provision for tax made during the current year Mere a books entry does not reduces the cash of current year Reasons for additions and deduction of items

26. Particulars Amount Calculation of Net Profit before Tax and Extraordinary Item. Add: - Transfer to reserves Interim dividend paid during the year Proposed dividend for Current Year – Provision for tax made during the current year Net Profit of the current year (after appropriations) Less: - Refund of tax Net profit before tax Interim dividend paid during the year Paid during the current year but related to financing activity Reasons for additions and deduction of items

27. Particulars Amount Calculation of Net Profit before Tax and Extraordinary Item. Add: - Transfer to reserves Interim dividend paid during the year Proposed dividend for Current Year – Provision for tax made during the current year Net Profit of the current year (after appropriations) Less: - Refund of tax Net profit before tax Refund of tax Received during the current year but related to previous year Reasons for additions and deduction of items

28. Calculate profit before taxation Particulars 31.03.2011 31.03.2010 Balance in Statement of Profit and Loss 75,000 60,000 Provision for tax 12,000 21,000 Proposed dividend 19,000 13,000 General reserves 12000 10,000 Refund of tax 12,000 Particulars Amount Working Note: Calculation of net profit before Tax A, Cash Flows from Operating Activities 15,000 Net Profit after appropriations: 12,000 Add: Provision for Tax (current year) Net Profit before tax 30,000 Add: Proposed Dividend (Previous year) 13,000 Add: Transferred to general reserves 2,000 Less: :- Refund of tax 12,000

29. Particulars Amount Format Of Cash from operating activities Add: Depreciation Preliminary Expenses/Discount on issue of Share and Deb written off Goodwill, Patents and Trademarks amortized Interest on long-term borrowings Loss on Sale of Fixed Assets Less: Interest Income Dividend Income Rental Income Profit on sale of Fixed Assets Operating Profit before Working Capital Changes Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Cash Generated from operations Less: Income Tax Paid (Previous year) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: A, Cash Flows from Operating Activities Net Cash Flows from/Used in operating activities

30. Reasons for additions and deduction of items Depreciation Preliminary Expenses/Discount on issue of Share and Deb written off Goodwill, Patents and Trademarks amortized Loss on Sale of Fixed Assets Non cash items does not reduces the cash of current year Interest Income Dividend Income Rental Income Profit on sale of Fixed Assets Inflow of cash but related to investing activity

31. Particulars Amount Format Of Cash from operating activities Add: Depreciation Preliminary Expenses/Discount on issue of Share and Deb written off Goodwill, Patents and Trademarks amortized Interest on long-term borrowings Loss on Sale of Fixed Assets Less: Interest Income Dividend Income Rental Income Profit on sale of Fixed Assets Operating Profit before Working Capital Changes Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Cash Generated from operations Less: Income Tax Paid (Previous year) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: A, Cash Flows from Operating Activities Net Cash Flows from/Used in operating activities

32. Reasons For Additions Decrease in current assets Particulars 2013 2014 Debtors 20,000 15,000 Amount received from debtors (assumed) = Rs 20,000 Amount due from debtors at the end = Rs 15,000 Net amount received from debtors Rs 5000 ( Inflow) Increase in current liability Particulars 2013 2014 creditors 10,000 20,000 Amount paid to creditors ( assumed) = Rs 10,000 Amount due to creditors at the end = Rs 20,000 Amount paid less to creditors Rs 10,000 ( Inflow)

33. Reasons For deductions Increase in current assets Particulars 2013 2014 Inventory 25,000 40,000 Amount received from sale of inventory (assumed) = Rs 25,000 Inventory unsold at the end of year = Rs 40,000 Net amount paid for inventory Rs 15000 ( outflow) Increase in current liability Particulars 2013 2014 Outstanding expenses 10,000 8,000 Amount paid for outstanding exp ( assumed) = Rs 10,000 Amount due for outstanding the end = Rs 8,000 Amount paid more for outstanding exp Rs 2,000 ( outflow)

34. Operating profit before working capital changes = 2,10,000 Calculate cash from operating activities Particulars Amount Inventory Add: Decrease in current Assets ,Increase in Current Liability Less: Increase in current Assets. Decrease in Current Liability Net Cash flow from operating activities (31,000) 13,000 2,23,000 (57,000) 2,10,000 Operating Profit before Working Capital Changes Trade Payables 13,000 Trade Receivables (24,000) 1,66,000 Office Exp Outstanding (2,000) Particulars 31.03.2012 31.03.2011 Trade Receivables 1,64,000 1,40,000 Inventory 1,15,000 84,000 Trade Payables 73,000 60,000 Office Expenses Outstanding 4,000 6,000

35. Particulars 31.03.2011 31.03.2012 Trade receivables 65,000 63,000 Trade payables 50,000 59,000 Expenses outstanding 2,000 1600 Prepaid expenses 900 1200 Inventory 70,000 58,000 Operating profit before working capital changes = 1,87,000 Calculate cash from operating activities Particulars Amount Inventory Add: Decrease in current Assets ,Increase in Current Liability Less: Increase in current Assets. Decrease in Current Liability Net Cash flow from operating activities 12,000 23,000 2,10,000 (7,00) 1,87,000 Operating Profit before Working Capital Changes Trade Receivables 2,000 Trade Payables 9,000 2,09,300 Office Exp Outstanding (400) Prepaid expenses (300)

36. Particulars 31.03.2011 31.03.2010 Operating loss before working capital chg 5,000 Trade Receivables 25,000 31,000 Outstanding Rent 12,000 21,000 Bank balance 40,000 38,000 Prepaid Expenses 4,000 2,000 Trade Payables 13,000 19,000 Calculate Cash Flows from Operating Activities from the following details: Particulars Amount Trade Receivables Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Net Cash used in operating activities Operating loss before working capital changes A, Cash Flows from Operating Activities (5,000) Prepaid Expenses Trade Payables Outstanding Rent (2,000) (6,000) (9,000) 6,000 6,000 1,000 (17,000) (16,000)

37. Particulars 31.03.2011 31.03.2012 Debtors 80,000 60,000 Bills receivables 7,000 10,000 Creditors 50,000 55,000 Bills payable 8000 6,000 Outstanding expenses 1,000 1,500 Prepaid expenses 1,800 1,600 Accrued income 8,00 900 Income received in advance 700 - Operating profit before working capital changes = 1,00,000 Calculate cash from operating activities

38. Particulars Amount Prepaid Expenses Add: Decrease in current Assets ,Increase in Current Liability Less: Increase in current Assets. Decrease in Current Liability Net Cash flow from operating activities 2,00 25,700 1,25,000 (58,00) 1,00,000 Operating Profit before Working Capital Changes Debtors 20,000 Creditors 5,000 1,19,900 Bills payables (2,000) Accrued income (100) Income received in advance (7,00) Exp Outstanding 5,00 Bills payables (3000)

39. Adjustment regarding provision for taxation As per the guidelines ( Circular no 43 dated 2 nd July by C.B.S.E ) Accounting treatment of Deferred tax liability is Non-evaluative ) NOTE:-

40. Note no 1 Amount 15,000 Net Profit after appropriations( 45,000 – 30,000) 20,000 Add: Provision for Tax 35,000 Particulars 2013 2014 Profit and loss A/c 30000 45000 Provision for taxation 20000 When only current year data is given Particulars Amount 35,000 (20,000) Net Profit before Tax (see note No. 1) Less: Tax paid Note:- Assumed tax paid will be equal to provision for tax Working Note: Calculation of net profit before Tax Cash Flows from Operating Activities

41. Note no 1 Amount 15,000 Net Profit after appropriations ( 45,000-30,000) 20,000 Add: Provision for Tax 35,000 Particulars 2014 Profit and loss A/c 30,000 45,000 Provision for taxation 14000 20000 When data for two years are given Particulars Amount 35,000 (14,000) Net Profit before Tax (see note No. 1) Less: Tax paid Previous year tax will be paid Current year tax will be added back Working Note: Calculation of net profit before Tax Cash Flows from Operating Activities

42. Adjustment Regarding Dividend

43. Note no 1 Amount 15,000 Net Profit after appropriations: 14,000 Add: Proposed dividend 29,000 Particulars 2013 2014 Profit and loss A/c 5,000 20,000 Proposed dividend 14,000 20,000 Particulars Amount Cash Flows from financing Activities (14,000) Less: Dividend Paid Previous year dividend will be paid( deducted in financing activities Previous year dividend will be added back in current year profit Working Note: Calculation of net profit before Tax

44. Problems Cash flow from operating activities

45. Treatment of goodwill Particulars 2013 2014 Goodwill 25,000 20,000 If goodwill is decreasing :- It will be added back to non-cash items in cash from operating activities (Goodwill written off) Particulars 2013 2014 Goodwill 25,000 32,000 If goodwill is increasing :- It will be deduced from cash from investing activities (Purchase of goodwill)

46. No . Particulars Amount 1 Depreciation on Fixed Tangible Assets (Machinery) 20,000 2 Loss on sale of Fixed Tangible Assets (Furniture) 2,000 3 Goodwill written off 9,000 4 Provision for Taxation 35,000 5 Transfer to General Reserve 17,500 6 Gain on sale of Fixed Tangible Assets (Machinery) 8,000 Particulars 31.03.2011 31.03.2012 Trade Receivables (all good) 50,000 62,000 Trade payables 45,000 55,000 Inventory 12,000 8,000 Income received in Advance 8,000 ------- Outstanding Expenses 6,000 3,000 Prepaid Expenses -- 5,000 The profit of Philips Ltd. after appropriations was 2,50,000. This profit was arrived at after taking into consideration the following items C.B.S.E guidelines

47. Particulars Amount Working Note: Calculation of net profit before Tax A, Cash Flows from Operating Activities 2,50,000 Net Profit after appropriations: 35,000 Add: Provision for Tax Add: Transfer to General Reserve Net Profit before tax 17,500 3,02,500

48. Particulars Amount Cash from operating activities Trade Payables Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Net Cash Flows from operating activities A, Cash Flows from Operating Activities 3,02,500 Prepaid Expenses Outstanding Expenses Income received in Advance (5,000) (3,000) (8,000) 10,000 14,000 3,39,500 3,11,500 (35,000) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Depreciation on Fixed Tangible Assets Loss on sale of Fixed Tangible Assets Goodwill written off Less : Gain on sale of Machinery 20,000 2,000 9,000 3,33,500 3,25,500 8,000 Operating Profit before Working Capital Changes Inventory 4,000 Trade Receivables (12,000) Less: Tax paid 2,76,500

49. Particulars Note no Amount 1 Revenue from operation 12,00,000 11 Other Income 1 18,000 111 Total Revenue 12,18,000 1V. Expenses Employee benefit expenses 10,000 Depreciation and amortization expenses 20,000 Other expenses 2 31,000 Total expenses 61000 V Profit before tax (111 – 1V.) 55,000 Less:- provision for tax 21,000 Profit for the period 34,000 Prepare cash from operating activities (1)Other income (2) Other expenses Profit on sale of machinery 5,000 Goodwill written off 8,000 Dividend received 3,000 Rent 18,000 Rent received 4,000 Loss on sale of building 5,000 Income tax refund 6,000

50. Particulars Amount Profit of the period 80,000 Provision for taxation 36,000 Depreciation and amortization exp 45,000 Profit on sale of land 15,000 Interest received 3,000 Goodwill written off 10,000 Loss on sale of plant 30,000 Particulars 31.03.2012 31.03.2013 Trade Receivables (All Good) 1,40,000 1,64,000 Trade payables 84,000 1,15,000 Inventory 60,000 73,000 Office expenses outstanding 6,000 4,000 Prepare cash from operating activities Particulars Amount Working Note: Calculation of net profit before Tax A, Cash Flows from Operating Activities 80,000 Net Profit after appropriations: 36,000 Add: Provision for Tax Net Profit before tax 1,16,000 Note:- Assumed tax paid will be equal to provision for tax = 36,000

51. Particulars Amount Inventory Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Net Cash Flows from operating activities A, Cash Flows from Operating Activities 1,16,000 (31,000) 13,000 2,23,000 (57,000) (36,000) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Depreciation And amortization exp Loss on sale of Plant Goodwill Written off Less : Gain on sale of Land 72,000 30,000 10,000 1,12,000 2,10,000 2,28,000 Operating Profit before Working Capital Changes Trade payables 13,000 Outstanding expenses (2,000) Less: Tax paid 1,30,000 Less : interest received (15,000) (3,000) (18,000) Trade receivables (24,000) 1,66,000 Cash generated from operating activities

52. Particulars Amount Profit after tax 1,30,000 Tax paid 15,000 Depreciation 32,000 Share issue expenses 10,000 Particulars 31.03.2012 31.03.2013 Trade Receivables (All Good) 65,000 63,000 Trade payables 50,000 59,000 Office expenses outstanding 2,000 1,600 Prepaid expenses 900 12,00 Inventory 70,000 58,000 Prepare cash from operating activities Particulars Amount Working Note: Calculation of net profit before Tax A, Cash Flows from Operating Activities 1,30,000 Net Profit after appropriations: 15,000 Add: Provision for Tax Net Profit before tax 1,45,000 Note:- Assumed tax paid will be equal to provision for tax = 15,000

53. Particulars Amount Inventory Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Net Cash Flows from operating activities A, Cash Flows from Operating Activities 1,45,000 12,000 23,000 2,10,000 (700) (15,000) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Depreciation Share issue expenses written off 32,000 10,000 42,000 1,87,000 Operating Profit before Working Capital Changes Trade payables 9,000 Prepaid Expenses (300) Less: Tax paid 1,94,300 Trade receivables 2,000 2,09,300 Cash generated from operating activities Outstanding expenses (400)

54. The Net income of M Ltd. for the year ended March 31, 2007 was Rs. 4,89,000.Depreciation charged for the year was Rs. 87,000. Income for the year was arrived at after adjusting for gain on sale of land Rs.1,05,000,loss on sale of equipment Rs.48,000 and writing off cost of equity issue Rs. 25,000. Additional Information Particulars March 31,2006 March 31,2007 Inventory 1,67,000 1,85,000 Receivables 1,45,000 1,42,000 Prepaid expenses 8,000 12000 Cash in hand and at bank 32,000 1 7,000 Payables 1,07,000 95,000 Expenses outstanding 9,000 13,000 Bank overdraft 80,000 60,000

55. Particulars Amount Format Of Cash flow statement Inventory Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Net Cash Flows from operating activities A, Cash Flows from Operating Activities 4,89,000 18,000 34,000 5,78,000 7,000 (4,000) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Depreciation on Fixed Tangible Assets Loss on sale of Equipment Writing off preliminary expense Less : Gain on sale of Land 87,000 48,000 25,000 1,60,000 5,44,000 105,000 Operating Profit before Working Capital Changes Payables 12,000 Trade creditors (3,000) Expenses outstanding 5,71,000 Prepaid expenses 4,000

56. Particulars Note no Amount 1 Revenue from operation 98000 11 Other Income 1 18,000 111 Total Revenue 1,16,000 1V. Expenses Employee benefit expenses 10,000 Depreciation and amortization expenses 20,000 Other expenses 2 31,000 Total expenses 61000 V Profit before tax (111 – 1V.) 55,000 Less:- provision for tax 21,000 Profit for the period 34,000 Less :- Proposed Dividend 10,000 Balance of profit 24,000 Prepare cash from operating activities (1)Other income (2) Other expenses Profit on sale of machinery 5,000 Goodwill written off 8,000 Dividend received 3,000 Rent 18,000 Commission accrued 4,000 Loss on sale of building 5,000 Income tax refund 6,000

57. Particulars Amount A, Cash Flows from Operating Activities 49,000 (15,000) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Depreciation Loss on sale of Building Goodwill Written off Less : Gain on sale of machinery 20,000 5,000 8,000 33,000 70,000 82,000 Less: Tax paid Interest received (5,000) (3,000) (12,000) 55,000 Cash generated from operating activities Rent received (4,000) Particulars Amount Working Note: Calculation of net profit before Tax A, Cash Flows from Operating Activities 24,000 Net Profit after appropriations: 15,000 Add: Provision for Tax (21000) - Refund of tax (6,000) Net Profit before tax 49,000 10,000 Add: Proposed dividend Cash flow from operating activities

58. Adjustment regarding provision for taxation As per the guidelines ( Circular no 43 dated 2 nd July by C.B.S.E ) Accounting treatment of Deferred tax liability is Non-evaluative ) NOTE:-

59. Note no 1 Amount 15,000 Net Profit after appropriations: 18,000 Add: Provision for Tax (current year) 33,000 Particulars 2013 2014 Profit and loss A/c 30,000 45,000 Provision for taxation 14,000 20,000 When two years data are given with adjustment Particulars Amount A, Cash Flows from Operating Activities 33,000 (12,000) Net Profit before Tax (see note No. 1) Less: Tax paid Particulars Amount Particulars Amount By Balance b/d 14,000 To balance c/d 20,000 32,000 32,000 By Statement Of Profit And Loss A/c ( current years provision balancing figure ) 18,000 To Cash A/c 12,000 Provision For Taxation A/c Adjustment:- Tax paid during the year Rs 12000

60. Note no 1 Amount 15,000 Net Profit after appropriations: 18,000 Add: Provision for Tax (current year) 33,000 Particulars 2013 2014 Profit and loss A/c 30,000 45,000 Provision for taxation 14,000 20,000 When two years data are given with adjustment Particulars Amount A, Cash Flows from Operating Activities 15,000 (12,000) Net Profit before Tax (see note No. 1) Less: Tax paid Particulars Amount Particulars Amount By Balance b/d 14,000 To balance c/d 20,000 32,000 32,000 By Statement Of Profit And Loss A/c ( current years provision ) 18,000 To Cash A/c ( balancing figure) 12,000 Provision For Taxation A/c Adjustment:- Provision for tax made during the year Rs 18000

61. Items Amount Provision for tax made during the year 44,000 Transfer to general reserves 5,000 Depreciation on tangible assets 50,000 Loss on sale of machinery 16,000 Provision for doubtful debts 10,000 Gain on sale of land 7,000 Particulars 2013 2014 Provision For Tax 10,000 25,000 Proposed Dividend 78,000 52,000 Prepaid Expenses 3,000 2,000 Inventory 51,000 40,000 Creditors 20,000 15000 The profit of Philips Ltd. after appropriations was 4,75,000. This profit was arrived at after taking into consideration the following items Additional Information

62. Particulars Amount Working Note: Calculation of net profit before Tax A, Cash Flows from Operating Activities 4,75,000 Net Profit after appropriations: 44,000 Add: Provision for Tax Add: Transfer to General Reserve Net Profit before tax 5,000 5,76,000 Particulars Amount Particulars Amount By Balance b/d 10,000 To balance c/d 25,000 54,000 54,000 By Statement Of Profit And Loss A/c 44,000 To Cash A/c ( bal fig 29,000 Provision For Taxation A/c Add: Proposed Dividend 52,000

63. Particulars Amount Format Of Cash flow statement Inventory Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Net Cash Flows from operating activities A, Cash Flows from Operating Activities 6,12,000 11,000 12,000 6,93,000 6,88,000 (29,000) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Depreciation on Fixed Tangible Assets Loss on sale of Machinery Provision for doubtful debts Less : Gain on sale of Land 50,000 16,000 10,000 ,76,000 6,81000 7,000 Operating Profit before Working Capital Changes Prepaid Expenses 1,000 Trade creditors (5,000) Less: Tax paid 6,59,000

64. Prepare cash from operating activities Tax paid during the year is Rs 18000 Particulars 31.03.2011 31.03.2010 Balance in Statement of Profit and Loss 75,000 60,000 Trade Receivables 25,000 31,000 Provision for tax 12,000 21,000 Goodwill 40,000 38,000 Prepaid Expenses 4,000 2,000 Proposed dividend 13,000 19,000

65. Particulars Amount Working Note: Calculation of net profit before Tax A, Cash Flows from Operating Activities 15,000 Net Profit after appropriations: 9,000 Add: Provision for Tax Add: Transfer to General Reserve Net Profit before tax 5,000 48,000 Particulars Amount Particulars Amount By Balance b/d 21,000 To balance c/d 12,000 30,000 30,000 By Statement Of Profit And Loss A/c ( bal fig 9,000 To Cash A/c 18,000 Provision For Taxation A/c Add: Proposed Dividend 19,000

66. Particulars Amount Format Of Cash flow statement Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Net Cash Flows from operating activities A, Cash Flows from Operating Activities 48,000 6,000 60,000 58,000 (18,000) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Provision for Depreciation 6,000 ,6,000 54,000 Operating Profit before Working Capital Changes Trade Receivables 6,000 Prepaid expenses (2,000) Less: Tax paid 40,000 (2,000) Note:- Goodwill is increasing it will come in investing activities

67. Cash flow from investing activities

68. Particulars Amount Proceeds from Sale of Tangible Fixed Assets Proceeds from Sale of intangible Fixed Assets Proceeds from Sale of Non-Current Investments Interest and Dividend received, Rent received Purchase of Tangible Fixed Assets Purchase of intangible Fixed Assets like goodwill Purchase of Non-Current Investments Net Cash from (or used) in Investing Activities B. Cash Flows from Investing Activities

69. Particulars Purchases sales Plant 6,20,000 2,00,000 Investment 2,40,000 80,000 Goodwill 1,00,000 - Patents --- 1,50,000 Interest received on debentures held as investment Rs 8,000 Interest paid on debentures issued Rs 15,000 Dividend received on shares held as investment Rs 20,000 Dividend paid on equity share capital Rs 25,000 A plot of land was purchased out of surplus for investment purposes was let out for commercial use . rent received was Rs 30,000 Prepare cash flow from investing activities

70. Particulars Amount Purchase of investment Sales of investment Goodwill purchase Purchase of plant Proceeds from sale of Plant Sale of patents Interest received Dividend received Rent received Net from Investing Activities Cash Flows from Investing Activities 8,000 (2,40,000) 80,000 (1,00,000) 1,50,000 2,00,000 (6,20,000) 4,72,000 30,000 20,000

71. Finding out the missing amount regarding fixed assets and depreciation when adjustments are given

72. Particulars Amount Particulars Amount By Balance b/d XXXX To Bank A/c XXXX XXXX XXXX By Bank A/c XXXX To Balance b/d XXXX Machinery A/c ( At Written down value) To Statement of P/L ( Profit On Sale ) By Dep. A/c XXXX XXXX Inflow (Add) Outflow (Less) When the fixed assets are shown at the written down value By Statement of P/L ( Loss On Sale ) XXXX

73. Particulars 2013 2014 Machinery 4,00,000 4,20,000 Additional information During the year machinery costing Rs 40,000 with its accumulated depreciation of Rs 24,000 was sold for Rs 20,000 Depreciation on machinery was Rs 30000 Prepare cash flow from investing activities Particulars Amount Particulars Amount By Balance b/d 4,20,000 To Bank A/c ( Bal Fig) 66,000 4,70,000 4,70,000 By Bank A/c 20,000 To Balance b/d 4,00,000 Machinery A/c(written down value To Statement of P/L ( profit on sale ) By Dep A/c 30,000 4,000 Inflow (Add) Outflow (less) Note: - Accumulated depreciation will not be consider because it has already been deducted in the previous years

74. Particulars Amount Particulars Amount By Balance b/d XXXX To Balance c/d XXXX XXXX XXXX By Statement Of P/L A/c ( Current Year Dep. ) XXXX 24,000 Provision For Depreciation A/c Particulars Amount Particulars Amount By Balance b/d XXXX To Bank A/c XXXX XXXX XXXX By Bank A/c XXXX To Balance b/d XXXX Machinery A/c ( At Cost) To Statement of P/L ( Profit On Sale ) By Acc Dep A/c XXXX XXXX To Machinery A/c Inflow (Add) Outflow (Less) When the fixed assets are shown at original cost and accumulated depreciation account is separately given By Statement of P/L ( Loss On Sale ) XXXX

75. Particulars 2002 2003 Equipment ( at cost) 65,00,000 78,70,000 Accumulated depreciation( 10,80,000 16,32,000 Additional information During the year equipment costing Rs 12,30,000 with its accumulated depreciation of Rs 7,18,000 was sold for Rs 4,68,000 Prepare cash flow from investing activities Particulars Amount Particulars Amount By Balance b/d 10,80,000 To Balance c/d 16,32,000 23,50,000 23,50,000 By Statement Of P/L A/c ( Bal fig ) 12,70,000 7,18,000 Provision For Depreciation A/c Particulars Amount Particulars Amount By Balance b/d 78,70,000 To Bank A/c ( Purchase Bal Fig) 26,00,000 91,00,000 91,00,000 By Bank A/c (sale) 4,68,000 To Balance b/d 65,00,000 Office Equipment A/C By Statement of profit & loss ( Loss on sale ) By Acc Dep A/c 7,18,000 44,000 To Machinery A/c Inflow Outflow

76. Particulars 2013 2014 Machinery ( at cost) 4,00,000 4,20,000 Accumulated depreciation( 1,00,000 1,10,000 Patents 2,80,000 1,60,000 Additional information During the year machinery costing Rs 40,000 with its accumulated depreciation of Rs 24,000 was sold for Rs 20,000 Patents were written off to the extent of Rs 40,000 and some patents were sold at a profit of Rs 20,000 Prepare cash flow from investing activities Particulars Amount Particulars Amount By Balance b/d 1,00,000 To Balance c/d 1,10,000 1,34,000 1,34,000 By Statement Of P/L A/c ( Bal fig ) 34,000 24,000 Provision For Depreciation A/c Particulars Amount Particulars Amount By Balance b/d 4,20,000 To Bank A/c ( Bal Fig) 60,000 4,64,000 4,64,000 By Bank A/c 20,000 To Balance b/d 4,00,000 Machinery A/c To Statement of profit & loss ( profit on sale) By Acc Dep A/c 24,000 4,000 To Machinery A/c Inflow Outflow

77. Particulars Amount Particulars Amount By Balance b/d 1,60,000 3,00,000 3,00,000 By Bank A/c 1,00,000 To Balance b/d 2,80,000 Patents To Statement of profit & loss ( profit on sale) By Depreciation 40,000 20,000 Inflow Particulars Amount Sale of machinery Purchase of machinery Sale of patents Net Cash from Investing Activities B. Cash Flows from Investing Activities (60,000) 20,000 60,000 1,00,000 Particulars 2013 2014 Machinery ( at cost) 4,00,000 4,20,000 Accumulated depreciation( 1,00,000 1,10,000 Patents 2,80,000 1,60,000 Additional information During the year machinery costing Rs 40,000 with its accumulated depreciation of Rs 24,000 was sold for Rs 20,000 Patents were written off to the extent of Rs 40,000 and some patents were sold at a profit of Rs 20,000 Prepare cash flow from investing activities

78. Particulars 2013 2014 Investment 34,000 28,000 During the year the company sold 40% of its investment held in the beginning of the period at a profit of Rs 8400. Calculate the cash flow from investment activities. Prepare cash flow from investing activities Particulars Amount Particulars Amount By Balance b/d 28,000 To Statement of P/L ( profit on sale) 8,400 50,000 50,000 By Bank A/c 22,000 To Balance b/d 34,000 Investment A/c To bank ( bal fig ) 7,600 Particulars Amount Sale of investment Purchase of investment Net Cash from Investing Activities B. Cash Flows from Investing Activities (7,600) 22,000 14,400 Outflow Inflow

79. Particulars 2013 2014 Investment A/c 2,50,000 5,00,000 Fixed assets A/c 8,75,000 11,90,000 Half of the investment held in the beginning of the year were sold at 10% profit Depreciation on fixed assets was Rs 1,00,000 for the year Interest received on investment Rs 35,000 Dividend received on investment Rs 15,000 Rent received Rs 10,0000 Prepare cash flow from investing activities Particulars Amount Particulars Amount By Balance b/d 5,00,000 To Statement of P/L ( profit on sale) 12,500 6,37,500 6,37,500 By Bank A/c 1,37,500 To Balance b/d 2,50,000 Investment A/c To bank ( bal fig ) 3,75,000 Inflow Outflow Particulars Amount Particulars Amount By Balance b/d 11,90,000 To Bank A/c ( Bal Fig) 12,90,000 12,90,000 4,15,000 By Depreciation A/c 100,000 To Balance b/d 8,75,000 Fixed Assets A/c Outflow

80. Particulars 2013 2014 Investment A/c 2,50,000 5,00,000 Fixed assets A/c 8,75,000 11,90,000 Half of the investment held in the beginning of the year were sold at 10% profit Depreciation on fixed assets was Rs 1,00,000 for the year Interest received on investment Rs 35,000 Dividend received on investment Rs 15,000 Rent received Rs 10,0000 Prepare cash flow from investing activities Particulars Amount Sale of investment Purchase of investment Purchase of fixed assets Interest received Dividend received Rent received Net Cash used Investing Activities B. Cash Flows from Investing Activities (3,75,000) 1,37,500 5,92,500 4,15,,000 100,00 15,000 35,000

81. Cash flow from financing activities

82. Particulars Amount Proceeds from issue of Shares and Debentures Proceeds from Long-term Borrowings Final Dividend Paid ,Interim Dividend Paid Interest on Long-term borrowings paid Repayment of Loan ,- Redemption of Debentures Net Cash from (or used) in financing Activities C. Cash Flows from Financing Activities

83. Particulars 31 st March 2007 31 st March 2006 Equity share capital 8,00,000 6,00,000 12% preference shares capital - 2,00,000 14% debentures 1,00,000 -- Equity shares were issued at a premium of 15% Underwriting commission on equity shares Rs 10,000 12% preference shares were redeemed at a premium of 5% 14% debentures were issued at a discount of 1% Interim dividend paid on equity shares Rs 90,000 Dividend paid on old preferences shares Rs 24000 Interest paid on debentures Rs 14,000 Prepare Cash Flow From Financing Activities Particulars Amount Proceeds from issue of equity share capital ( Rs 2,00,000 + Premium Rs 30,000 – underwriting commission Rs 10000) Redemption of preference shares ( RS 2,00,000 + RS 10000 (Premium) Proceeds from issue of debentures(1,00,000 – 1,000) Interim dividend paid on equity shares Dividend paid on preference shares ( 12% on 2,00,000) Interest paid on debentures ( 14% on 1,00,000) Net Cash used in Financing Activities Cash Flows from Financing Activities (19,000) 2,20,000 (2,10,000) 99,000 (14,000) (24,000) (90,000)

84. Particulars 31 st March 2006 31 st March 2007 Equity share capital 6,00,000 10,00,000 18% preference shares capital 4,00,000 3,00,000 Securities premium 1,00,000 2,60,000 14% debentures 2,00,000 2,50,000 Discount on debentures 5,000 6,000 Underwriting commission on issue of shares 20,000 Dividend on preference shares and an interim dividend @ 15% were paid on equity shares on march 31st 2007 Preferences shares were redeem on march 31st 2007 at a premium on 5% such premium has been provided out of profit New shares and debentures were issued on march 31st 2007 Prepare cash flow from financing activities Particulars Amount Proceeds from issue of equity share capital ( Rs 4,00,000 + Premium Rs 1,60,000 – underwriting commission Rs 20000) Redemption of preference shares ( RS 1,00,000 + RS 5000 (Premium) Proceeds from issue of debentures(50,000 – 1,000) Interim dividend paid on equity shares ( 15% on 6,00,000) Dividend paid on preference shares ( 18% on 4,00,000) Interest paid on debentures ( 14% on 2,00,000) Net Cash from Investing Activities Cash Flows from Financing Activities 294,000) 5,40,000 (1,05,000) 49,000 (28,000) (72,000) (90,000)

85. Particulars 31 st March 2004 31 st March 2005 Equity share capital 20,00,000 30,00,000 18% preference shares capital 2,00,000 1,00,000 Securities premium - 1,00,000 Profit and loss balance 4,00,000 8,00,000 10% debentures 10,00,000 10,00,000 Preference shares were redeemed on 31st march, 2005 at a premium of 5%. Dividend on equity shares was paid 8%. Fresh issue of equity shares was done on 1st April 2004 Prepare cash flow from financing activities Particulars Amount Proceeds from issue of equity share capital ( Rs 10,00,000 + Premium Rs 1,00,000 Redemption of preference shares ( RS 1,00,000 + RS 5000 (Premium) Dividend paid on equity shares Dividend paid on preference shares ( 10% on 2,00,000) Interest paid on debentures ( 10% on 10,00,000) Net Cash Used in Investing Activities Cash Flows from Financing Activities 6,35,000) 11,00,000 (1,05,000) (1,00,000) (20,000) (2,40,000)

86. Balancing of cash flow statement

87. Particulars Amount Format Of Cash flow statement Net Cash from (or used) in Investing Activities Cash Flows from Investing Activities Net Cash from (or used) in Financing Activities Cash Flows from Financing Activities Net Increase (or Decrease) in Cash & Cash Equivalents (X+Y+Z) Add : Cash and Cash Equivalents in the beginning Cash and cash Equivalents at the end of the year Cash Flows from Operating Activities Cash Generated from operations activities

88. Particulars Amount Cash from operating activities 103800 Net cash used in investing activities (1,86,000) Cash from financing activities 72200 Prepare cash flow statement. Particulars 31st March 2012 31st March 2011 Cash and cash equivalent Cash in hand 40,000 20,000 Current investment 20,000 50,000 Particulars Amount Cash flow statement Net cash used in Investing Activities Net cash from Financing Activities Net Decrease in Cash & Cash Equivalents (X+Y+Z) Add : Cash and cash equivalents in the beginning Cash and cash equivalents at the end of the year Net cash from Operations Activities 70,000 1,03,800 (10,000) 72,200 (1,86,000) 60,000

89. Particulars Amount Cash from operating activities (16,000) Net cash used in investing activities (1,05,000) Cash from financing activities 1,30,000 Prepare cash flow statement. Particulars 31st March 2012 31st March 2011 Cash and cash equivalent Cash 7,000 15,000 Bank 32,000 20,000 Short term investment 15,000 10,000 Particulars Amount Cash flow statement Net cash used in Investing Activities Net cash from Financing Activities Net increase in Cash & Cash Equivalents (X+Y+Z) Add : Cash and cash equivalents in the beginning Cash and cash equivalents at the end of the year Net cash used in Operations Activities 45,000 (16,000) 9,000 1,30,000 (1,05,000) 54,000

90. Comprehensive Questions

91. Particulars Note No. 31.03.2012 31.03.2011 I. Equity And Liabilities 1. Shareholders’ funds (a) Share capital (b) Reserve and surplus 2. Non Current Liabilities Long Term borrowing 3. Current Liabilities Trade payables 1 2 5,00,000 3,05,000 3,10,000 95,000 4,00,000 2,10,000 3,00,000 80,000 Total 12,10,000 9,90,000 II. ASSETS (1) Non-Current Assets Fixed Assets ( tangible) Long term investment (2) Current Assets Inventories Trade Receivable Cash & Cash Equivalents 7,00,000 56 ,000 2,80,000 1,14,000 60,000 5,00,000 70,000 2,10,000 140,000 70,000 Total 12,10,000 9,90,000 .Prepare cash flow statement.

92. Note no 31.03.2012 31.03.2011 1 Reserves and surplus General Reserves 1,15,000 1,00,000 Profit And Loss 1,90,000 1,10,000 2 Long term borrowing 12% Debentures 1,50,000 2,00,000 14% Mortgage Loan 1,60,000 1,00,000 Interest paid during the year Rs 37,800

93. Particulars Amount Trade Payables Add: Decrease in CA ,Increase in CL Less: Increase in CA. Decrease in CL Net Cash Flows from operating activities Cash Flows from Operating Activities 95,000 15,000 41,000 1,73,800 (70,000) 1,03,800 Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Interest paid 37,800 1,32,800 Operating Profit before Working Capital Changes Trade Receivables 26,000 Inventory (70,000) 37,800 X Particulars Amount Working Note : Calculation of net profit before Tax 80,000 Net Profit after appropriations: : ( 1,90,000 – 1,10,000) Add: Transfer to General Reserve Net Profit before tax 15,000 95,000

94. Particulars Amount Cash Flows from Investing Activities (2,00,000) Purchase of fixed assets Sale of long term investment Net cash used in Investing Activities 14,000 (186,000) Issue of shares Proceeds from mortgage loan Redemption of debentures Interest paid Net Cash from financing activities Cash Flows from Financing Activities 1,00,000 60,000 (50,000) (10,000) (37800) 72,200 Net Decrease in Cash & Cash Equivalents (X+Y+Z) Add : Cash and cash equivalents in the beginning Cash and cash equivalents at the end of the year 70,000 60,000 Y Z

95. Particulars Note No. 31.03.2012 31.03.2011 I. Equity And Liabilities 1. Shareholders’ funds (a) Share capital (b) Reserve and surplus (P/L Acc. 2. Non Current Liabilities Long term borrowing 3. Current Liabilities Trade payables Other current liability 1 2 3,00,000 54,000 95,000 90,000 35,000 2,00,000 40,000 50,000 75,000 25,000 Total 5,74,000 3,90,000 II. Assets (1) Non-Current Assets Fixed Assets Tangible Assets Intangible assets Long term investment (2) Current Assets Current investment Inventories Trade Receivable Cash & Cash Equivalent Other current assets 3 4 5 6 1,70,000 67,000 65,000 15,000 90,000 1,20,000 39,000 8,000 90,000 1,05,000 40,000 10,000 50,000 50,000 35,000 10,000 Total 5,74,000 3,90,000 .Prepare cash flow statement.

96. Note 31.03.2012 31.03.2011 1 Long term borrowing Public deposits 95,000 50,000 2 Other Current Liabilities Outstanding expenses 35,000 25,000 3 Tangible assets Land and building 1,70,000 90,000 4 Intangible assets Goodwill 60,000 90,000 Patents 7,000 15,000 5 Current investment marketable securities 15,000 10,000 6 Other current assets Prepaid Expense 8,000 10,000 Interest paid on public deposits Rs 9000 On 1 st April 2011 10,000 shares of 10 each were issued at 6% discount

97. Particulars Amount Trade payables Add: Decrease in CA ,Increase in CL Less: Increase in CA. Decrease in CL Net Cash used in operating activities Cash Flows from Operating Activities 14,000 15,000 27,000 94,000 (1,10,000) (16,000) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Patents written off Interest Paid 8,000 9,000 67,000 Operating Profit before Working Capital Changes Prepaid Expenses 2,000 Inventory (40,000) 53,000 X Goodwill written off 30,000 Outstanding Expenses 10,000 Trade receivables (70,000) Particulars Amount Working Note: Calculation of net profit before Tax 14,000 Net Profit after appropriations: : ( 54,000 – 40,000) Net Profit before tax 14,000 Discount written off 6,000

98. Particulars Amount Cash Flows from Investing Activities (80,000) Purchase of land and building Purchase of long term investment Net cash used in Investing Activities (25,000) (105,000) Issue of shares (1,00,000 – 6,000 ) Proceeds from public deposits Interest paid Net Cash from financing activities Cash Flows from Financing Activities 9,4,000 45,000 (9,000) 9,000 1,30,000 Net Increase in Cash & Cash Equivalents (X+Y+Z) Add : Cash and cash equivalents in the beginning Cash and cash equivalents at the end of the year 45,000 54,000 Y Z

99. Particulars Note No. 31.03.2012 31.03.2011 I. Equity And Liabilities 1. Shareholders’ funds (a) Share capital (b) Reserve and surplus 2. Non Current Liabilities Long term borrowing 3. Current Liabilities short term provision Trade payables Short term provisions 1 2 3 80,000 80,000 -- 25,000 90,000 45,000 80,000 30,000 75,000 37,000 46,000 32,000 Total 3,20,000 3,00,000 II. ASSETS 1 Non-Current Assets Fixed Assets 2 Current Assets Current investment Inventories Trade Receivable Cash & Cash Equivalents 4 90,000 30,000 90,000 97,000 13,000 1,50,000 20,000 60,000 65,000 5,000 Total 3,20,000 3,20,000 34.Prepare cash flow statement.

100. Note 31.03.2012 31.03.2011 1 Long term borrowing 15 % loan - 75,000 2 Short term borrowing Bank overdraft 25,000 37,000 3 Short term provisions Provision for taxations 15,000 12,000 Proposed divided 30,000 20,000 4 Fixed assets Plant and machinery 1,50,000 2,00,000 Less provision for deprecation (60,000) (50,000) Loan was repaid on 1 st April, 2011

101. Particulars Amount Trade payables Add: Decrease in CA ,Increase in CL Less: Increase in CA. Decrease in CL Cash generated in operating activities Cash Flows from Operating Activities 95,000 44,000 44,000 1,49,000 (72,000) 77,000 Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Depreciation on plant 10,000 1,05,000 Operating Profit before Working Capital Changes Inventory (30,000) 10,000 Trade receivables (32,000) Net Cash used in operating activities 65,000 X Less: - payment of tax ( previous year ) (12,000) Particulars Amount 50,000 Net Profit after appropriations: (80,000 – 30,000) 15,000 Add: Provision for Tax ( current year) Add: Proposed dividend ( current year) Net Profit before tax 30,000 95,000 Working Note: Calculation of net profit before Tax Current investment (10,000)

102. Particulars Amount Cash Flows from Investing Activities 50,000 Sale of plant and machinery Net cash from Investing Activities 50,000 Repayment of Loan Payment of dividend Net Cash used in financing activities Cash Flows from Financing Activities (75,000) (20,000) 20,000 (95,000) Net Increase in Cash & Cash Equivalents (X+Y+Z) Add : Cash and cash equivalents in the beginning Cash and cash equivalents at the end of the year (32,000) (12,000) Y Z

103. Particulars Note No. 31.03.2012 31.03.2011 I. Equity And Liabilities 1. Shareholders’ funds (a) Share capital (b) Reserve and surplus (P/L Acc. 3. Current Liabilities Trade payables 1 2 2,50,000 59,000 49,500 2,25,000 35,000 37,500 Total 3,58,500 2,97,500 II. ASSETS 1 Non-Current Assets Fixed Assets ( tangible) Intangible assets 2 Current Assets Inventories Trade Receivable Cash & Cash Equivalents 3 4 1,60,000 20,000 15,000 1,54,500 9,000 1,20,000 36,000 10,000 1,19,000 12,500 Total 3,58,500 2,97,500 35.Prepare cash flow statement.

104. Note no 31.03.2012 31.03.2011 1 Share capital Equity share capital 2,00,000 1,50,000 Preference share capital 50,000 75,000 2 Reserves and surplus General reserves 35,000 20,000 Profit and loss account 24,000 15,000 3 Tangible Assets Building 60,000 80,000 Plant 1,00,000 40,000 4 Intangible assets Goodwill 20,000 36,000 Depreciation charges on plant Rs 10,000 Depreciation charges on building Rs 60,000

105. Particulars Amount Trade payables Add: Decrease in CA ,Increase in CL Less: Increase in CA. Decrease in CL Cash Flows from Operating Activities 24,000 12,000 12,000 1,22,000 (40500) 81,500 Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Depreciation on plant 10,000 1,10,000 Operating Profit before Working Capital Changes Inventory (5,000) 86,000 Trade receivables (35,500) Net Cash from operating activities Depreciation on Building 60,000 Goodwill written off 16,000 Particulars Amount 9,000 Net Profit after appropriations: 15,000 Add: Transfer to General Reserve Net Profit before tax 24,000 Working Note: Calculation of net profit before Tax

106. Particulars Amount Particulars Amount By Balance b/d 60,000 To Bank A/c ( Bal Fig ) Purchase 40,000 1,20,000 1,20,000 By depreciation A/c 60,000 To Balance b/d 80,000 Building A/c ( At Cost) Particulars Amount Particulars Amount By Balance b/d 1,00,000 To Bank A/c ( Bal Fig) purchase 70,000 1,10,000 1,10,000 By depreciation A/c 10,000 To Balance b/d 40,000 Plant A/c ( At Cost)

107. Particulars Amount Cash Flows from Investing Activities (40,000) Purchase of Building Net cash from Investing Activities (1,10,000) Issue of equity share capital Redemption of preference share capital Net Cash used financing activities Cash Flows from Financing Activities 50,000 (25,000) (3,500) 25,000 Net decrease in Cash & Cash Equivalents (X+Y+Z) Add : Cash and cash equivalents in the beginning Cash and cash equivalents at the end of the year 12,500 9,000 Y Z (70,000) Purchase of Plant

108. Particulars Note No. 31.03.2012 31.03.2011 I. Equity And Liabilities 1. Shareholders’ funds (a) Share capital (b) Reserve and surplus (P/L Acc. 2. Non Current Liabilities Loan from borrowing 3. Current Liabilities Trade payables 7,00,000 2,00,000 3,00,000 30,000 6,00,000 1,10,000 2,00,000 25,000 Total 12,30,000 9,35,000 II. ASSETS (1) Non-Current Assets Fixed Assets ( tangible) Tangible Assets (2) Current Assets Inventories Trade Receivable Cash & Cash Equivalents 11,00,000 70,000 32,000 28,000 8,00,000 60,000 40,000 35,000 Total 12,30,000 9,35,000 At the beginning of the year a piece of machinery of the book value of Rs 80,000 was for Rs 65,000 Depreciation charges on tangible assets amounted to Rs 2,00,000. Prepare cash flow statement.

109. Particulars Amount Trade payables Add: Decrease in CA ,Increase in CL Less: Increase in CA. Decrease in CL Cash Flows from Operating Activities 90,000 8,000 13,000 3,18,000 (10,000) 3,08,000 Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Depreciation on fixed assets(machinery) 2,00,000 3,05,000 Operating Profit before Working Capital Changes Inventory (10,000) 2,15,000 Trade receivables 5,000 Net Cash flow from operating activities Depreciation on Building 15,000 X Particulars Amount Working Note : Calculation of net profit before Tax 90,000 Net Profit after appropriations: ( 2,00,000 – 1,10,000)

110. Particulars Amount Particulars Amount By Balance c/d 11,00,000 To Bank A/c ( Bal Fig) 5,80,000 13,80,000 13,80,000 By depreciation A/c 2,00,000 To Balance b/d 8,00,000 Fixed assets Tangible A/c By Bank (sale) 65,000 By statement of profit and loss a/c 15,000

111. Particulars Amount Cash from operating activities Add: Decrease in current Assets ,Increase in Current Liabilities Less: Increase in current Assets. Decrease in Current Liabilities Net Cash Flows from operating activities A, Cash Flows from Operating Activities 48,000 6,000 60,000 58,000 (18,000) Net Profit before Tax (see note No. 1) Adjustments for non cash and non operating items: Provision for Depreciation 6,000 ,6,000 54,000 Operating Profit before Working Capital Changes Trade Receivables 6,000 Prepaid expenses (2,000) Less: Tax paid 40,000 (2,000)