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Assignment on Cash Flow Statement.wbk

The document outlines the cash flow statement components, including inflows and outflows from operating, investing, and financing activities. It emphasizes the importance of cash flow for understanding liquidity and solvency while noting limitations such as ignoring non-cash items and being historical in nature. Additionally, it discusses adjustments related to depreciation and other financial activities.

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Meenakshi Chandna
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3 views

Assignment on Cash Flow Statement.wbk

The document outlines the cash flow statement components, including inflows and outflows from operating, investing, and financing activities. It emphasizes the importance of cash flow for understanding liquidity and solvency while noting limitations such as ignoring non-cash items and being historical in nature. Additionally, it discusses adjustments related to depreciation and other financial activities.

Uploaded by

Meenakshi Chandna
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Compile By,

Puneet Chitra ( PGT( Commerce))


M.COM,BED,MBA( FINANCE)
Inflow Outflow
Sales of Building Purchase of Building
Sales of Furniture Purchase of Furniture
Sale of Other Fixed Assets Purchase of other fixed assets
Interest Received
Dividend Received

Financing Activities: Activities that changes composition of owner


fund and borrowed fund is known as financing activities.

Inflow Outflow
Issue of Shares Redemption of Debentures
Issue of Debentures Redemption of Preference Share
Issue of Loan Redemption of Loan Interest Paid
Dividend Paid

Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
1. Short term Planning
2. Cash flow helps of understand liquidity and solvency

3. Efficient cash management


4. Reason for cash position

5. Comparative Study

1. Non cash items are ignored


2. Not a substitute for an Income Statement

3. Historical in nature
4. It ignore basic accounting concept i.e. accrual concept

CASH FLOW STATEMENT (AS – 3 REVISED)

Add Interest Paid


Premium on red. Of shares and deb.

Add Goodwill written off


Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
Add Preliminary expenses written off

Add discount on issue of debentures written off


Add under written commission written off
Add loss on sale of fixed assets

Add depreciation
Less non Trading Income

Rent received
Interest received
Refund of tax

Add decrease in CA and increase in C.L.

Decrease in stock / inventories


Decrease in Debtors / B/R

Decrease in Accured Income


Decrease in Prepaid Expenses
Increase in creditors / Bills Payable

Increase in Outstanding Expenses


Increase in Advance income

Increase in Provision for doubtful debts’


Less increase in CA and decrease in C.L.
Increase in Stock / Inventories

Increase in Debtors / B/R


Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
Increase in Accural Incomes

Increase in Prepaid Expenses


Decrease in Creditors / B / P
Decrease in outstanding Expenses

Decrease in Advance Income


Decrease in Provision for Doubtful Debt

Cash from operating activities less Taxes Paid

Cash from Investing Activities

Sale of Building
Sale of Furniture

Sale of Investment
Rent Received
Interest and dividend received

Purchase of Building
Purchase of Investment

Purchase of intangible Assets i.e. Goodwill, Parents

Cash flow from financing activities


Issue of Shares
Issue of Debenture

Taking Loan

Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
Redemption of Pref. Share

Redemption of Debentures
Interest Paid
Premium on Red. Of Perf. Shares

Dividend Paid

Particulars Amount

Net Profit
Add Proposed Dividend (current year)
Add Transfer to General Reserves

Add dividend Paid


Add Transfer to Reserve Fund

Add Transfer to Dividend equalization fund


Add Provision for tax (current year)

Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
Enterprise

Financial Enterprise Non

Financial Enterprise
e.g. mutual

A B C D E F G H I
Interest Paid Interest Dividend Interest Dividend Interest Dividend Interest Dividend
on Deposit Received Received Paid Paid Paid Paid Received Received

Operating Activities Financial Activity Financial Activity


Invest Activity

b, c, - Inflow Outflow Outflow


Inflow

a - Outflow

Important (All Adjustment have double effects)


1. Depreciation
Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
Particulars 2005 2006

Plant and Machinery 90,000 1,20,000

a. Depreciation of Plant and Machinery Rs. 20,000

CASH FLOW STATEMENT (AS – 3 REVISED)

Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
100

Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
1,000
1,500

Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)
5,000 3,000

Compile By,
Puneet Chitra ( PGT( Commerce))
M.COM,BED,MBA( FINANCE)

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