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CASH FLOW STATEMENT

VERY SHORT ANSWER QUESTIONS

1. What do you mean by Cash Flow statement?
2. What are the various activities classified as per AS-3(revised) related to Cash flow statement?
3. State one objective of Cash flow Statement.
4. What do you mean by cash equivalents?
Ans. Short-term highly liquid investments which are readily convertible into known amount of cash and
which are subject to an insignificant risk of change in the value.
5.State the category of the following items for a financial as well as non-financial company
(a) Dividend received (b) Interest received (c) Interest paid (d)
Dividend paid
Ans.
Financial company Non-financial
company
(a) Dividend received Operating activity Investing
activity
(b) Interest received Operating activity Investing
activity
(c) Interest paid Operating activity financing
activity
(d) Dividend paid Financing activity financing
activity
6. Calculate the net amount of cash flow if a fixed asset costing Rs. 32,000 (having a book value of Rs.
24,000) is sold at a loss of Rs. 8,000.
Solution: Cash Inflow from Investing activities = Rs. 16,000
(Book value-loss=Amount received from sale)
(Rs. 24,000-Rs.8,000=Rs. 16,000)
7. Calculate Cash Flow from Operating Activities from the following information:

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Particulars Amount (Rs.)

Profit for the year 2013-2014 1,00,000

Transfer to General Reserve during the year 20,000
Depreciation provided during the year 40,000
Profit on sale of furniture 10,000
Loss on sale of Machine 20,000
Preliminary Expenses written off during the year 20,000

Additional Information:

Particulars March(2013) March(2014)

Debtors 20,000 30,000

Bills Receivable 14,000 10,000
Stock 30,000 36,000
Prepaid Expenses 4,000 6,000
Creditors 40,000 36,000
Bills Payables 30,000 50,000
Outstanding Expenses 6,000 8,000

(Ans. 1,94,000)
8. Following balances appeared in the Machinery Account and Accumulated Depreciation Account
in the books of JB Ltd.
Particulars March (2013) March (2014)
Machinery A/c 17,78,985 26,55,450
Accumulated depreciation A/c3,40,795 4,75,690

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Additional Information:
Machinery costing 2,65,000 on which accumulated depreciation was Rs. 1,00,000 was sold for Rs.
75,000. You are required to
Compute the amount of Machinery purchased, depreciation charged for the year and loss on sale of
Machinery.
How shall each of the items related to Machinery be shown in Cash Flow Statement.
Hint: Purchase of Machinery= Rs. 11,41,465
Sale of Machinery = Rs. 75,000
Depreciation Provided = Rs. 2,34,895
Loss on sale of machinery = Rs. 90,000
9. From the following information, prepare a Cash Flow Statement:
Balance Sheet as at
Particulars Not 31.03.14 31.03.13
e Rs. Rs.
no.
I. Equity and Liabilities
(1) Shareholders’ Funds
(a) Share capital 1 1,30,000 90,000
(b) Reserves and Surplus 2 85,000 50,000
(2) Non-Current Liabilities
(3) Current Liabilities
Trade Payables
Total 22,000 17,400
II. ASSETS 2,37,000 1,57,400
(1) Non-Current Assets
Tangible Fixed Assets
Intangible Assets(Goodwill)
93,400
(2) Current Assets
1,000
Inventories
Trade Receivables 21,000 22,000
Cash & Cash Equivalents 39,000 36,000
Short-term Loans & Advances (Adv. Tax) 6,000
5,000
Total 5,000

2,37,000
1,57,400

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Note 1. SHARE CAPITAL

Particulars 31.03.14 31.03.13
Equity shares of Rs. 10 each1,30,000 90,000

Note 2. RESERVES AND SURPLUS

General Reserve 55,000 30,000
Profit and loss A/c 30,000 20,000

Additional Information: During the year Depreciation charged on fixed assets was
Rs. 20,000 and Income Tax Rs. 5,000 was paid in advance.
(Ans. Purchase of fixed Asset = 92,600)

10. From the following information prepare Cash Flow statement:

Particulars 31.03.14 31.03.13

I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
Share capital 1,00,000 1,00,000
Reserves & Surplus (P&L A/c) 60,000 30,000

80,000 60,000
(2) Non-Current Liabilities (6%
Debentures)
(3) Current Liabilities 35,000 30,000
Trade Payables 65,000 70,000
Other Current Liabilities
3,30,000 2,90,000
Total

II. ASSETS
(1) Non-Current Assets 1,90,000 1,50,000
Tangible Fixed Assets
30,000 40,000
Non-Current Investments

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55,000 40,000
(2) Current Assets 45,000 40,000
Inventories 10,000 20,000
Trade Receivables
Cash & Cash Equivalents 3,30,000 2,90,000
Total

Andditional Information:
(i) A piece of Machinery costing Rs. 5,000 on which depreciation of Rs.
2,000 had been charged was sold for Rs. 1,000. Depreciation charged
during the year was Rs. 17,000.

(ii) During the Current year New Debentures have been issued on 1st Aug.
(Ans. Operating Activities = 23,400, Investing Activities = (49,000), Financing
Activities = 15,600)
11. From the following information prepare a Cash flow Statement:

BALANCE SHEET as at
Particulars No 31.03.14 31.03.13
te
no.
I. EQUITY AND LIABILITIES
(1) Shareholders’ Funds
(a) Share Capital 1 1,00,000 1,00,000
(b) Reserves and Surplus 2 31,000 30,000
(2) Current Liabilities
Trade Payables 6,200 9,200
Short-term Provisions(for 18,000 16,000
Taxation)
Total 1,55,200 1,55,200
II. ASSETS
(1) Non-current Assets
Tangible fixed Assets
72,000 77,000
Intangible Assets (goodwill)
12,000 12,000
Non-current Investments (10%
11,000 10,000
Investments)

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(2) Current Assets

Inventories 23,400 30,000
Trade Receivables 22,200 20,000
Provision for Doubtful Debt (600) (400)
Cash & Cash Equivalents 15,200 6,600
Total
1,55,200 1,55,200

Note No. 1
Share Capital
Equity shares of Rs. 10 each 1,00,000
1,00,000

Note NO. 2
Reserves and Surplus
General Reserve 18,000 14,000
Profit & Loss A/c 13,000 16,000

Additional Information: Deprecition charges Rs. 8,000. Provision for taxation of

Rs. 19,000 made during the year.
(Ans. Operating activities = 11,600; Investing Activities = (3,000))

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

Balance Sheets as at
Particulars Not 31.03.14 31.03.13
e
no.
I. EQUITY AND LIABILITIES
(1) Shareholders’ Funds
(a) Share Capital 1 50,000 45,000
(b) Reserves and Surplus 2 29,950 28,275
(2) Non-Current Liabilities (10% Loan on 40,000
Mortgage)

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(3) Current Liabilities

Trade Payables
Other current liabilities 15,000 18,000
Total 10,000 7,500
(c) ASSETS
(3) Non-current Assets 1,44,950 1,38,775
Tangible fixed Assets
Accumulated Depreciation
Non-current Investments (10% 78,000 77,000
Sinking fund Investments) (15,200) (11,400)
(4) Current Assets
Inventories 16,000 12,000
Trade Receivables
Provision for Doubtful Debt
Cash & Cash Equivalents 35,000 30,600
Total 21,300 23,500
(1,350) (1,425)
11,200 8,500

1,44,950 1,38,775

Note No. 1
Equity shares of Rs. 10 each 50,000 45,000
Note No. 2
Sinking fund 16,000 12,000
Retained Earnings 13,950 16,275

Additional Information:
Dividend amounting to Rs. 5,000 was paid during the year.
(Ans. Operating Activities = 10,500; Investing Activities = (3,800); Financing Activities = (4,000))

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