Chapter Name :- CASH FLOW STATEMENT

CASE BASED / SOURCE BASED QUESTIONS

Q1 Kaveri Ltd. A financing company obtained loans and advances of 5,00,000 during the year @ 12% p.a
it will be included in which of the following activities while preparing the cash flow statement ?
a) Investing Activities
b) Financing Activities
c) Both Investing and Financing Activities
d) Operating Activities
Q2 Fine Garments Ltd. is engaged in the export of readymade garments. The company purchased a
Q2 machinery of ₹10,00,000 for the use in packaging of such garments. Cash flow due to the purchase of
machinery will be cash flow from:
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) Cash Equivalent
Q3 1. Following is the Balance sheet of Moon Ltd. read and answer the question that follows:
Particulars Not 31-3-20 (`) 31-3-19
e (`)
No.
I. EQUITY AND LIABILITIES
(1) Shareholder’s Funds
(a) Share Capital 4,50,000 3,50,000
(b) Reserves and Surplus 1 1,25,000 50,000
(2) Non-current Liabilities
Long-term borrowings 2 2,25,000 1,75,000
(3) Current Liabilities
(a) Short-term borrowings 3 75,000 37,500
(b) Short-term provisions 4 1,00,000 62,500
Total 9,75,000 6,75,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets
(i) Tangible 5 7,32,500 4,52,500
(ii) Intangible 6 50,000 75,000
(b) Non-current Investments 75,000 50,000
(2) Current Assets
(a) Current Investments 20,000 35,000
(b) Inventories 7 61,000 36,000
(c) Cash and Cash Equivalents 36,500 26,500
Total 9,75,000 6,75,000

Notes to Accounts:

Note Particulars 31.3.2020 (`) 31.3.2019 (`)

No.
1. Reserves and Surplus
Surplus (balance in Statement of Profit and Loss) 6,00,000 4,00,000
 6,00,000 4,00,000
2. Tangible Assets
Machinery 25,40,000 20,00,000
Less: Accumulated Depreciation (4,00,000) (3,00,000)
21,40,000 17,00,000
3. Intangible Assets
Goodwill 80,000 2,24,000
80,000 2,24,000

Additional Information:
During the year a piece of machinery costing Rs.48,000 on which accumulated depreciation
was Rs.32,000 was sold for Rs.12,000.
1(a) How much Machinery is purchased?
(i)Rs. 5,88,000
(ii)Rs. 5,00,000
(iii)Rs. 5,08,000
(iv)Rs. 88,000
1 (b) What is depreciation charged during the year:
(i)Rs. 1,32,000
(ii)Rs. 32,000
(iii)Rs. 12,000
(iv)Rs. 1,00,000
1(c) Money raised from long-term borrowings __________________
(i)Rs. 1,40,000
(ii)Rs. 40,000
(iii)Rs. 1,32,000
(iv)Rs. 1,00,000

Q4 Welprint Ltd. has given you the following information: Machinery as on April 01, 2016 50,000
Machinery as on March 31, 2017 60,000, Accumulated Depreciation on April 01, 2016 25,000
Accumulated Depreciation on March 31, 2017 15,000 During the year, a Machine costing Rs. 25,000
with Accumulated Depreciation of Rs. 15,000 was sold for Rs. 13,000.
2a. What will be the cash flow from Investing Activities on the basis of the above information?
(i)Net Cash used in Investing Activity Rs.22,000
(ii)Net cash flow from Investing Activity Rs.22,000
(iii) Both (i) and (ii)
(iv) None of the above
Q5 Read the passage given below and answer the following questions…

Particulars 31/3/2021 ( Rs.) 31/3/2020( Rs.)

Machinery 3300000 2500000
Less: Accumulated Depreciation (600000) (500000)
During the year machinery costing Rs. 800000 on which accumulated depreciation was Rs. 320000 was
sold for Rs. 640000.

I. Outflow due to purchase of Machinery will be:

 (A) 1600000
(B) 1100000
(C) 700000
(D) 1900000
II. Depreciation on Machinery will be:
(A) 240000
(B) 402000
(C) 420000
(D) 220000
Q6 Read the passage given below and answer the following question:

X Ltd incorporated in January 2015. It started business in April 2015.

It has the following information for the year 2020-21.

31st March- 31st March-2021

Particulars
2020 Rs. Rs.
Surplus (i.e. balance in the statement of
Profit and Loss) 71,000 89,000
Inventory 12,000 4,000
Trade receivables 58,000 45,000
Outstanding expenses 14,600 10,000
Goodwill 57,000 27,000
Cash in hand 9,000 12,000
Machinery 82,000 56,000

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

I. What is the value of Operating profit before working capital changes in the year 2020-21?

A) ₹18,000
B) ₹66,000
C) ₹86,000
D) ₹ 145,000
II. Loss/profit on sale of machinery is :
A) ₹10,000 Loss
B) ₹20,000 Loss
C) ₹30,000 Profit
D) ₹40,000 Loss
III. What is the amount of cash flow from operation activity?
A) ₹161,400
B) ₹138,400
C) ₹153,000
D) ₹166,000
Q7 Read the passage given below and answer the following question:
RAJARAM Textile LTD, provides you the following information:

Particulars 31st March, 31st

2020 March,
2021
 Proposed dividend Rs.20,000
Additional information :
Equity share capital Rs.3,00,000 of
raised during the year at a premium of
20%.
10% bank loan Rs.1,00,000 was repaid
with interest.
Dividend received during the year was
Rs.15,000.

I. What is the proceeds from issue of shares to be included in financing activity?

A) ₹3,00,000
B) ₹60,000
C) ₹3,60,000
D) ₹2,40,000

II. How the amount of interest paid will be treated in Cash Flow Statement?
A) ₹10,000 as outflow in financing activity.
B) ₹90,000 as inflow in financing activity.
C) ₹10,000 as outflow in operating activity.
D) ₹. 1,10,000 as outflow in operating activity.
III. Calculate the amount of Cash Flow from Financing Activity:
A) ₹ 2,40,000
B) ₹230,000
C) ₹2,60,000
D) ₹2,55,000
Q8 Read the question carefully and answer the following:
BALANCE SHEET (Extract)
As on 31st March 2017 & 2018
Equity and Liabilities 31.03.2018 31.03.2017
(Rs.) (Rs.)
Equity Share Capital 6,00,000 4,00,000
8% Preference Share Capital 3,50,000 2,00,000
Surplus,i.e.Balance in Statement of
Profit and Loss 4,00,000 1,50,000
Dividend Payable 10,000 …………

Additional Information:
(i) Dividend was proposed @10% for the year 2016-17 and 15% for the year 2017-18.
(ii) An interim dividend of Rs 30,000 on equity shares was paid on 31 st December 2017.
Answer the following questions:
(I A) The above items will be considered under which activity?
a. Operating activity
 b. Investing activity
c. Financing activity
d. cash and Cash equivalent

(I B) Which one will give correct result while calculating Net profit before tax and extraordinary items:
A. Net profit earned during the year -Dividend paid of previous year + Dividend paid on Preference
Share + Interim dividend paid during the year.
B. Net profit earned during the year + Dividend paid of previous year -Dividend paid on Preference
Share + Interim dividend paid during the year.
C. Net profit earned during the year + Dividend paid of previous year + Dividend paid on Preference
Share - Interim dividend paid during the year.
D. Net profit earned during the year + Dividend paid of previous year + Dividend paid on Preference
Share + Interim dividend paid during the year.

(I C)What is the total amount of dividend paid to Preference Share holder which will be used while
calculation of Net profit before tax and extraordinary items.
a. Rs. 28,000
b. Rs. 16,000
c. Rs. 40,000
d. Rs. 10,000

(I D) The amount of ‘Net Profit before tax and extraordinary items’ will be:
a. Rs. 1,30,000
b. Rs. 2,46,000
c. Rs. 3,36,000
d. Rs. 3,30,000
Q9 When Depreciation is given in additional information as :
BALANCE SHEET (Extract)
As on 31st March 2020 & 2021
Assets 31.03.2020 31.03.2021
(Rs.) (Rs.)
Plant 40,000 50,000

Additional Information:
(i) Plant costing Rs. 25,000 (accumulated Depreciation Rs 8,000) was sold for Rs 12,000.
 (ii) Depreciation on Plant charged during the year was Rs.25, 000.
Answer the following on the basis of above information:
(II A) The above activity will be classified as:
a. Operating activity
b. Investing activity
c. Financing activity
d. None of the above
(II B) What will be the final cash flow/used from the activity classified in above question:
a. Rs. 52, 000
b. Rs. 12,000
c. Rs. 40,000
d. Rs. 64,000
(II C) While preparing working note, The Depreciation charged during the year will be shown on:
a. Dr. side of plant A/c
b. Cr. Side of plant A/c
c. It will get not be shown any where
d. The difference of ‘Depreciation charged during the year’ and ‘Accumulated depreciation’ will be
shown on Dr. side of Plant A/c.
(II D)What is the amount of Profit/Loss on sale of Plant and where will it be shown?
a. Profit of Rs. 5,000, Add in Operating activity
b. Loss of Rs. 5,000, Less in Operating activity
c. Profit of Rs. 5000, Less in Operating activity
d. Loss of Rs. 5,000, Add in Operating activity
Q10 I. From the following Balance Sheet as on 31.03.2021 and 31.03.2020 answer the following questions:

PARTICULARS NOT 31ST 31ST

E MARCH,202 MARCH,202
NO. 1(RS) 0(RS)
I. EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share capital 2,00,000 2,00,000
(b) Reserves and Surplus: Surplus, I.e.,
Balance Statement of Profit & Loss 1,83,000 82,000
2. Non-Current Liabilities
Long-term borrowings:
12% Debentures 1,30,000 50,000
3. Current Liabilities
(a) Trade Payables 1,50,000 1,10,000
(b) Other Current Liabilities 12,000 20,000
 TOTAL 6,75,000 4,62,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment (Fixed
Assets)-Tangible 2,74,000 1,17,000
(b) Non-Current Investments 68,000 55,000
2. Current Assets
(a) Inventories 2,06,000 1,50,000
(b) Trade Receivables 32,000 70,000
(c ) Cash and Cash Equivalents 95,000 70,000

TOTAL 6,75,000 4,62,000

1. Refer to question no.1 and calculate the cash Flow from operating Activities.
A. 1,32,500
B. 1,22,500
C. 1,70,000
D. 72,500

2. Refer to question no.1 and calculate the cash Flow from Investing Activities.

A. 132,500
B. 1,22,500
C.1,70,000
C. 72,500
3. Refer to question no.1 and calculate the cash Flow from financing Activities.
A. 1,32,500
B. 1,22,500
C.1,70,000
D. 72,500
4. Refer to question no.1 and calculate the Net increase in cash and Cash equivalents.

A. 25,000
B. 52,500
C. 35,000
D. 52,500
 Answer Key

CASE BASED QUESTIONS

Q NO 1 2 3 4 5 6
ANS.KEY D B 1- a (1) 1- b (1) 1-c(1) 2- a(1) 1- A 2-C I-D II-B III- B
Q NO 7 8 9
II-
ANS.KEY I-C A III-B IA-C IB-D IC-B ID-C IIA- B IIB- C IIC- A IID-A
Q NO 10
ANS.KEY I-B 2-C 3-D 4-A