The Statement of Cash

Flows
Intermediate Accounting 5 The Statement of Cash Flows

1.
1. Conceptual
Conceptual overview
overview and
and uses
uses of
of the
the
Statement
Statement of
of Cash
Cash Flows
Flows

A statement of cash flows is a

financial statement of a company that
shows the cash inflows, cash outflows,
and net change in cash from its
operating, investing, and financing
activities during an accounting period,
in a manner that reconciles the
company's beginning and ending cash
balances.
 Statement of Cash Flows
• Links Balance Sheet and Income Statement elements to
change in cash position.
• Integral part of “holy trinity” of financial statements …
shows the ability of the firm to generate cash (given
normal assumptions like continuity, stability etc.)
• “Undoes” some accrual accounting adjustments
underlying the income statement.
• Presents cash flows logically organized by source or
type of activity generating the cash flows.
Intermediate Accounting 5 The Statement of Cash Flows

Uses
Uses of
of Statement
Statement of
of Cash
Cash Flows
Flows

The statement of cash flows helps users to assess--

 The company’s ability to generate positive future cash flows.
 The company’s ability to meet its obligations and pay
dividends.
 The company’s need for external financing.
 The reasons for differences between the company’s net
income and associated cash receipts and payments.
 Both the cash and noncash aspects of the company’s
investing and financing transactions.
Intermediate Accounting 5 The Statement of Cash Flows

2.
2. Structure
Structure of
of the
the Statement
Statement of
of Cash
Cash
Flows
Flows
Three categories of cash flows

(1) Cash flows from operating

activities.
(2) Cash flows from investing
activities.
(3) Cash flows from financing
activities.
Intermediate Accounting 5 The Statement of Cash Flows

Cash
Cash Flows
Flows from
from Operating
Operating Activities
Activities

Operating
Operatingactivities
activitiesinclude
includeall
alltransactions
transactionsand
andother
other
events
eventsthat
thatare
arenot
notinvesting
investingand
andfinancing
financingactivities.
activities.
Operating
Operatingactivities
activitiesinclude
includetransactions
transactionsinvolving
involving
acquiring,
acquiring,selling,
selling,and
anddelivering
deliveringgoods
goodsfor
forsale,
sale,asaswell
well
as
asproviding
providingservices.
services.
Cash
Cashreceipts
receiptsfrom
fromthethesale
sale Cash
Cashpayments
paymentsto to
of
ofgoods
goodsor orservices
servicesandand suppliers
suppliersfor
forinventory
inventory
collections
collectionsofofaccounts
accounts and
andon
onaccount,
account,forfor
receivable
receivablearearetypical
typicalcash
cash wages,
wages,and
andfor
fortaxes
taxesare
are
inflows
inflowsfrom
fromoperating
operating examples
examplesof ofcash
cash
activities.
activities. outflows
outflowsfrom
fromoperating
operating
activities.
activities.
Intermediate Accounting 5 The Statement of Cash Flows

Cash
Cash Flows
Flows from
from Investing
Investing Activities
Activities

The
The Cash
CashFlows
FlowsFrom
FromInvesting
InvestingActivities
Activities section
section
includes
includesall
allthe
thecash
cashinflows
inflowsand
andoutflows
outflowsinvolved
involvedin
in
investing
investingactivities
activitiestransactions
transactionsofofthe
thecompany.
company.
Common
Commoncashcashflows
flowsfrom
frominvesting
investingactivities
activitiesare--
are--
 Receipts from selling investments in stocks and debt
securities.
 Receipts from selling property, plant, and equipment.
 Payments for investments in stocks and debt
securities.
 Payments for purchases of property, plant, and
equipment.
Intermediate Accounting 5 The Statement of Cash Flows

Cash
Cash Flows
Flows from
from Financing
Financing Activities
Activities

The
The Cash
CashFlows
FlowsFromFromFinancing
FinancingActivities
Activities section
section
includes
includesall
allthe
thecash
cashinflows
inflowsandandoutflows
outflowsinvolved
involvedinin
the
the financing
financingactivities
activitiestransactions
transactionsof ofthe
thecompany.
company.
Common
Commonfinancing
financingactivities
activities are--
are--

 Receipts from the issuance of debt securities.

 Receipts from the issuance of stocks.
 Payment of dividends.
 Payments to retire debt securities.
 Payments to reacquire stock.
Intermediate Accounting 5 The Statement of Cash Flows

Supplemental
Supplemental disclosures
disclosures

Non-cash
Non-cashinvesting
investingandandfinancing
financing
activities
activitiesaffect
affectan
anentity’s
entity’s
financial
financialposition
positionbutbutnot
notthe
the
entity’s
entity’scash
cashflow
flowduring
duringaaperiod
period
should
shouldbe bedisclosed
disclosedin in
supplemental
supplementalpart partto
tocash
cashflow
flow
statement.
statement.
Intermediate Accounting 5 The Statement of Cash Flows

3.
3. Reporting
Reporting Cash
Cash Flow
Flow From
From Operations
Operations

Operating cycle
AAcompany's
company'soperating
operatingcycle
cycleisisthe
theaverage
averagetime
timetaken
takento
to
spend
spendcash
cashfor
forinventory,
inventory,process
processand
andsell
sellthe
theinventory,
inventory,
collect
collectthe
theaccounts
accountsreceivable,
receivable,and
andconvert
convertthem
themback
backinto
into
cash.
cash.

Net
Netincome
incomeand
andthe
thenet
netcash
cashflow
flowwithin
withinthe
theoperating
operating
cycle
cycleare
areunlikely
unlikelyto
tobe
bethe
thesame
samebecause
becauseofofdifferences
differences
between
betweenthe
thetiming
timingofofthe
thecash
cashflows
flowsand
andthe
therecognition
recognitionof
of
revenues
revenuesand
andexpenses.
expenses.
Intermediate Accounting 5 The Statement of Cash Flows

Two
Two methods
methods

FASB allows two

methods for
calculating and
reporting a company's
net cash flow from
operating activities:
 Direct method
 Indirect method
Intermediate Accounting 5 The Statement of Cash Flows

Direct
Direct Method
Method

 This method reports directly the major classes of

operating cash receipts and payments of an entity
during a period.
 Accrual-basis revenues and expenses must be
converted to equivalent cash receipts and
payments.
 The amount of cash actually collected or paid is
determined.
Intermediate Accounting 5 The Statement of Cash Flows

Direct
Direct Method
Method Example:
Example: Cash
Cash Receipts
Receipts

Sales and Cash Collected from Customers:

Beginning accounts receivable 50
+ Sales 160
= Cash available for collection 210
- Ending accounts receivable 70
= Cash collected from customers 140
Intermediate Accounting 5 The Statement of Cash Flows

Direct
Direct Method
Method Example:
Example: Cash
Cash Paid
Paid

Cost of Goods Sold and Cash Paid for Inventory:

Ending inventory 90
+ Cost of goods sold 120
= Required inventory 215
- Beginning inventory 100
= Cash paid for inventory this year 115
Intermediate Accounting 5 The Statement of Cash Flows

Direct
Direct Method
Method Example
Example

Yummy
Yummy Corporation’s
Corporation’s Income
Income
Statement
Statement isis as
as follows:
follows:
Sales revenue (cash and A/R) 70,000
Less:
Cost of goods sold (cash and A/P) (29,000)
Salaries expense (cash and S/P) (13,000)
Depreciation expense (8,000) (50,000 )
Income before income taxes 20,000
Income tax expense (cash) (6,000 )
Net income 14,000
Intermediate Accounting 5 The Statement of Cash Flows

Direct
Direct Method
Method Example
Example

Cash flows From Operating Activities:

Cash Inflows:
Cash received from customers 72,600
Cash inflows from operating
activities Salaries
Salaries expense
expense –– increase
$72,600
increase
Cash Outflows: in
in salaries
salaries payable
payable
Amount
Amount
Decrease paid
paid
in in
in cash.
cash.
accounts
Cash paid to suppliers Decrease in accounts
$(38,000)
Cash paid to employees receivable
receivable ($2,600)
(12,200)($2,600) ++
Cash paid for income taxes sales sales revenue
revenue
(6,000)
Increase
Increase in
Cash outflows for operating in($70,000)
inventory
inventory (2,000)
($70,000) (2,000) ++
activities decrease
decrease inin accounts
accounts payable
payable (7,000)
(7,000)
(56,200 )
++ cost
cost of
Net cash provided by operating of goods
goods sold
activities sold (29,000).
(29,000).
$16,400
Intermediate Accounting 5 The Statement of Cash Flows

Indirect
Indirect Method
Method

 This is a method of reporting net cash flow from

operations that involves reconciling net income to
a cash basis. It shows how non-cash flows affect
net income.
 This method makes the following adjustments:
 Adjustments for receivables and other current operating
assets.
 Adjustments for payables and other current liabilities.
 Adjustments for depreciation and other non-cash items.
 Adjustments for gains and losses.
Intermediate Accounting 5 The Statement of Cash Flows

Non-cash
Non-cash Adjustments
Adjustments

 Depreciation and similar non-cash items do not

affect cash and are not reported on the statement
of cash flows.
 Any non-cash item that reduces net income should
be added back to net income in the indirect
method.
 Any non-cash item that increases net income
should be subtracted from net income in the
indirect method.
Intermediate Accounting 5 The Statement of Cash Flows

Relationship
Relationship Between
Between NetNet Income
Income and
and
Operating
Operating Cash
Cash Flow
Flow
Business
Business engages
engages inin
operating
operating activities
activities

Cash
Cash isis received
received and
and
disbursed
disbursed

Operating
Operating cash
cash flow
flow
Apply
Apply accrual
accrual “Undo”
“Undo” accrual
accrual
accounting
accounting rules
rules accounting
accounting to
to get
get
back
back to
to cash
cash flow
flow
Net
Net income
income
Intermediate Accounting 5 The Statement of Cash Flows

Added
Added back
back since
since
Indirect
Indirect Method
Method Example depreciation
depreciation isis not
Example not
an
an outflow
outflow of
of cash.
cash.
Net Cash flows From Operating Activities:
Net income 14,000
Adjustments for differences
between income flows and cash
flows for operating activities:
Add: Depreciation expense 8,000
Decrease in accounts receivable 2,600
Increase in salaries payable 800
Less: Increase in inventory (2,000 )
Decrease in accounts payable (7,000 )
Net cash provided by operating
activities
Same
Same amount
amount asas the
the direct
direct method
method 16,400
Intermediate Accounting 5 The Statement of Cash Flows

4.
4. Preparing
Preparing aa complete
complete Statement
Statement of
of
Cash
Cash Flows
Flows
Process
Process for
for preparing
preparing aa statement
statement of
of
cash
cash flows
flows
① Prepare the heading for the statement of cash flows and
list the three major sections.
② Calculate the net change in cash that occurred during the
accounting period.
③ Determine the net income and list this amount as the
first item in the net cash flow from operating activities
section.

Continued
Continued
Intermediate Accounting 5 The Statement of Cash Flows

Process
Process for
for preparing
preparing aa statement
statement of
of cash
cash
flows
flows

④ Calculate the increase or decrease that occurred during

the accounting period in each balance sheet account
(except cash).
⑤ Determine whether the increase or decrease in each
balance sheet account (except cash) caused an inflow or
outflow of cash and, if so, whether the cash flow was
related to an operating, investing, or financing activity.
⑥ If no cash flow occurred in Step 5, determine whether
the increase or decrease in each balance sheet account
(except cash) was the result of a non-cash income
statement item or a simultaneous investing and/or
financing transaction.
Continued
Continued
Intermediate Accounting 5 The Statement of Cash Flows

Process
Process for
for preparing
preparing aa statement
statement of
of cash
cash
flows
flows

⑦ Complete the various sections of the statement of cash

flows and check that the subtotals of the sections sum to
the net change in cash and that the sum of the net change
in cash and the beginning cash balance is equal to the
ending cash balance reported on the balance sheet.
Intermediate Accounting 5 The Statement of Cash Flows

Simple
Simple Example
Example

ABC
Statement of Cash Flows
For Year Ended December 31, 2005

The
statement’s
heading
Continued
Continued
Intermediate Accounting 5 The Statement of Cash Flows

Simple
Simple Example
Example

Net Cash Flow From Operating Activities

Net income 7,000
Adjustments for differences between income
and cash flows from operating activities:
Add: Depreciation expense 2,300
Increase in accounts payable 1,500
Less: Increase in accounts receivable (2,700 )
Net cash provided by operating activities 8,100
Cash Flows From Investing Activities
Payment for purchase of building (12,000 )
Proceeds from sale of land, at cost 3,000
Net cash used for investing activities (9,000 )
Continued
Continued
Intermediate Accounting 5 The Statement of Cash Flows

Simple
Simple Example
Example

Cash Flows From Financing Activities

Proceeds from issuance of bonds 7,000
Payment of dividends (3,500 )
Net cash provided by financing activities 3,500
Net increase in Cash 2,600
Cash, January 1, 2005 4,000
Cash, December 31, 2005 6,600

This amount should match

the balance of the Cash
account in the ledger.
Intermediate Accounting 5 The Statement of Cash Flows

5.
5. Using
Using cash
cash flow
flow data
data to
to assess
assess
financial
financial strength
strength
Cash
Cash flow-to-net
flow-to-net income
income
Cash from operations
Net income
o Measure of earnings quality
o Tends to be greater than 1
o Should remain fairly stable for the
years for a specific company
Intermediate Accounting 5 The Statement of Cash Flows

Assessing
Assessing Financial
Financial Strength
Strength

Cash
Cash flow
flow adequacy
adequacy

Cash from operations + Interest paid + Taxes paid

Cash paid for interest

o Measures ability to service debt

o Generally, a higher ratio indicates
more solvency
Intermediate Accounting 5 The Statement of Cash Flows

Assessing
Assessing Financial
Financial Strength
Strength

Cash
Cash flow
flow adequacy
adequacy
Cash from operations
Cash required for investing activities
o Measures relationship between investment spending and
cash generated by operations
o Indicate a company’s attitude towards reinvestment in long-
lived production assets
o When ratio is small it indicates that cash flows from
operations fall short of funding growth
 Format of cash flow statement

Balance as on 1.1 Cash outflows

Cash In Hand Redemption of shares
Cash AT BANK Redemption of DEB
Add: Cash Inflows Purchase of FA
Issue of shares Purchase of Investments
Issue of debentures Repayment of loans
Sale of Fixed Assets Increase in Current assets
Borrowing(long , medium Decrease in Liablities
Short-term)
Cash from operations: Payment of taxes
Decrease in assets Payment of dividends
Increase in Liablities O/S exp of previous year
O/S income of previous Expenses paid in advance
Year collected in advance Balance as on 31.12
Cash in hand
Cash at bank
 Calculate of cash from operations
• To Depreciation By Opening balance
• To Goodwill Written off By dividends received
• To General reserve By interest on investments
• To Loss on sale By profit on sale of FA
• To Current years O/S exp By O/S income
• To Prepaid Exp By income received in advance
• To Decrease in CA By Increase in CA
• To increase in CL By decrease in CL
• To closing balance By Cash from operations
• (Balancing Fig)
 Calculate Cash from operations
• Problem 1996 1997
• P&L A/c Balance 25000 155000
• Debtors 45000 42000
• Creditors 20000 26000
• B/R 12000 15000
• Prepaid expenses 1600 1400
• B/P 18000
16000
• O/s Expenses 1200 1600
• O/s Income 800 900
• Income received in advance 250 300
 Solution
• Calculation of Cash from operations Adjusted profit & Loss A/c
• To decrease in debtors 3000 By Opening balance 25000
• To increase in creditors 6000 By increase in B/R 3000
• To decrease in prepaid exp 200 By decrease in B/p 2000
• To increase in O/S exp 400 By increase in O/S exp 100
• To increase income received By cash from operation 134550
• In advance 50 (balancing fig)
• To Closing balance 155000
•
• 164650
164650
 2.From the following P&L A/c prepare Cash from operation
• To salaries 10000 By Gross Profit 50000
• To Rent 3000 By profit on sale of land 9000
• To Depreciation 5000 By income tax refund 7000
• To Discount 1000
• To loss on sale 2000
• To goodwill written off 8000
• To proposed dividends 10000
• To provision for tax 10000
• To Net Profit 17000

• 66000
66000
 2 Solution Cash from operations
• Net profit as per P&L A/c 17000
• Add Non cash non operating charges
• Depreciation 5000
• loss on sale 2000
• goodwill written off 8000
• proposed dividends 10000
• provision for tax 10000 35000
•
52000
• Less non cash non operating income
• Profit on sale of land 9000
• Income tax refund 7000 16000

• Cash from operations 36000

 3.Prepare fund from operation and cash from operations

• 1997 1998
• Equity Share Capital 400000 400000
• Reserves and surplus 282000 346000
• Depreciation Reserve 20000 28000
• Secured loans 40000 60000
• Creditors for goods 129000 106000
• O/s expenses 17000 3000
• 888000 943000
• Plant & Equip 570000 600000
• Inventories 196000 226000
• Debtors 79000 57000
• Cash at bank 43000 60000
• 888000 973000
 3.Computation of cash from operations
• Computation of Fund from operations
• Reserves and surplus 346000
• Less Balance in 1997 282000
• Profit added during the year 64000
• Add Depreciation 8000
• Fund from operations 72000

• Computations of cash from operations

• Profit earned 64000
• Add Depreciation 8000
• Decrease in debtors 22000 30000
• 94000
• Less Decrease in creditors 23000
• Decrease in O/S exp 14000
• Increase in inventories 30000 67000
• Cash from operations 27000
4.Prepare statement of cash flow
• 1992 1993 1992 1993
• 7% Redeemable Pref Shares 1000 Fixed Assets 4100 4000
• Equity Shares 4000 4000 Less Depreciation 1100 1500
• General Reserves 200 200 3000 2500
• P&L A/c 100 120 Debtors 2000 2400
• Debentures 600 700 Stock 3000 3500
• Creditors 1200 1100 Prepaid Exp 30 50
• Prov for Tax 300 420 Cash 120 350
• Proposed Dividends 500 580
• Bank O/D 1250 680

• 8150 8800 8150 8800

•
•
 Solution 4 Adjusted P & L A/c

• To Provision for Tax 420 By Opening Balance 100

• To Proposed Dividends 580 By Increase in debtors 400
• To Depreciation 400 By increase in stock 500
• To Closing Balance 120 By increase in prepaid exp 20
• By decrease in creditors 100
• By cash from operations 400
• 1520 1520
• Cash flow statement
• Cash Balance 120 Bank O/D 1250
• Cash Inflows Cash outflows
• Issue of Pref Shares 1000 Tax paid 300
• Issue of Deb 100 Dividends Paid 500
• Sale of FA 100 2050
• Cash From operations 400 Cash balance 350
• 1720
• Bank O/D 680
• 2400 2400
 5.Prepare Cash flow statement
• Liablities 2000 2001 Assets 2000 2001
• Creditors 40000 44000 Cash 10000 7000
• Mr X’s Loan 25000 Debtors 30000 50000
• Loan from bank 40000 50000 Stock 35000 25000
• Capital 125000 153000 Machinery 80000 55000
• Land 40000 50000
• Building 35000 60000
• 230000 247000 230000 247000
• During the year a machine costing Rs 10000 accumulated dep 3000 was
sold for 5000 .The provision for dep against machinery as on 1/1/2001 was
25000 and on 31/12/2001 was 40000 .Net profit for the year 2001 amounted
to 45000 .You are required to prepare cash flow statement
5. Solution

• Machinery Account
• To balance b/d 105000 By Bank 5000
• By Loss on sale 2000
• By Prov for dep 3000
• BY Balance C/d 95000
• 105000 105000
• Provision for depreciation a/c
• To Machinery A/c 3000 By balance b/d 25000
• To balance c/d 40000 By P& L A/C 18000
• 43000 43000
• Cash from operations
• Profit made during the year 45000
• Add Dep on machinery 18000
• Loss on sale 2000
• Decrease in stock 10000
• Increase in creditors 4000 34000
• 79000
• Less Increase in debtors 20000
• Cash from operations 59000
Combined Capital

To Drawings A/c 17000 By Opening Balance 125000

To Closing balance 153000 By Net Profit 45000
• 170000 170000
Cash flow statement

• Cash balance as on 1/1/01 10000

• Add Cash Inflows
• Cash from operations 59000
• Loan from bank 10000
• Sale of machinery 5000 74000
• 84000
• Less Cash outflows
• Purchase of land 10000
• Purchase of building 25000
• Loan repaid 25000
• Drawings 17000 77000

• Cash balance as on 31/12/01 7000

 Cash Flow From Operating Activities:

• Cash Flow From Operating Activities:

• (+) Cash Received From Customers
• (+) Other Operating Cash Receipts (if Any)
• (-) Cash Paid To Suppliers (including Suppliers Of Inventory,
Insurance, Advertising, Etc.)
• (-) Cash Paid To Employees
• (-) Interest Paid
• (-) Income Taxes Paid
• (-) Other Operating Payments, If Any
• (=) Total Net Cash Provided (used) By Operating Activities
 Cash Flows From Investing Activities:

• Cash Flows From Investing Activities:

• (+) Proceeds From Sale Of Assets
• (-) Purchases Of Property And Equipment
• (=) Total Net Cash Provided (used) By Investing
Activities
 Cash flow from Investing activities

•   Cash received from issues of debt and capital stock

• (+) Net Borrowing Under Line Of Credit Agreement
• (+) Proceeds From New Borrowings
• (+) Proceeds From Issuance Of Stock
• (+) Partner/owner Capital Contributions
• - Cash pd for divid. & re-acqu. of debt & cap. stock
• (-) Repayment Of Loans
• (-) Principal Payments Under Capital Lease Obligations
• (-) Dividends/distributions/withdrawals Paid
• =Cash Flow From Financing Activities
 ABC Company
Sources and Uses of Funds during 200X

• Account 12/31/xx  12/31/xx  Source Use Type Of

Activity
• Cash 50 55 5 Oper.
• Accounts Receivable 350 200 150 Oper
• Inventories 300 275 25 Oper.
• Equipment 1400 1000 400
Invest.
• Depreciation 500 400 100 Oper.
• Accounts Payable 60 30 30 Oper.
• Notes payable 100 70 30
Financ.
• Accrued Wages 10 10 Oper.
• Accrued Taxes 50 40 10 Oper.
• Totals 2820 2080 170 580
 6.Prepare Cash flow statement Revised method

• Liablities 2000 2001 Assets 2000 2001

• Creditors 40000 44000 Cash 10000 7000
• Mr X’s Loan 25000 Debtors 30000 50000
• Loan from bank 40000 50000 Stock 35000 25000
• Capital 125000 153000 Machinery 80000 55000
• Land 40000 50000
• Building 35000 60000
• 230000 247000 230000 247000
• During the year a machine costing Rs 10000 accumulated dep 3000 was
sold for 5000 .The provision for dep against machinery as on 1/1/2001 was
25000 and on 31/12/2001 was 40000 .Net profit for the year 2001 amounted
to 45000 .You are required to prepare cash flow statement
 Solution 6 Cash Flow statement
1. Cash Flow from operating activities
Net profit made 45000
Adjustment for depreciation 18000
Loss on sale of machinery 2000
Operating profit made before 65000
working capital changes
Decrease in stock 10000
Increase in creditors 4000
Less Increase in debtors 20000
Net Cash from operating activities 59000

2. Cash flow from investing activities

Sale of machinery 5000
Less Purchase of land 10000
Less Purchase of building 25000
Net cash flow from investing activities -30000
 Solution6
3. Cash flow from financing activities
Loan from bank 10000
Less Mr X Loan Repaid 25000
Less Drawing 17000
Net cash flow from financing activities -32000

Net increase or decrease in cash equivalent -3000

Cash Opening balance 10000

Cash closing balance 7000

 7.Prepare cash flow statement

• Liabilities 2000 2001 Assets 2000 2001

• Share Capital 1700000 1835000 Building 800000 1000000
• Reserves 40000 83700 P&M 250000 370000
• P &L App A/c 100000 130000 Furniture 5000 6000
• Provi For Divide 70000 50000 Cash 2000 2200
• Creditors 100000 95000 Debtors 100000 45000
• Bank O/D 8000 18000 B/R 8000 9000
• B/P 14000 13000 Stock 400000 343700
• Mortgage Loan 10000 70000 Investments 164000 170000
• Prepaid Exp 3000 3100
• Goodwill 300000 343700
• Preliminary Exp 10000 2000

• Dep charged Bldg 3% of cost of 900000,P & M 8% of cost of 400000,Furniture 5% of

cost of 8000
• Investments are purchased and interest received 3000 was used in writing down the
book value of investment.
• Dividends 7000 were paid and interim dividend 20000 was paid out of P&L App A/c.
 Soution7 Cash Flow statement

• Working
• Net profit as per P/L A/c
• Closing Balance as per P&L A/c 130000
• Add Transfer to reserve 43700
• Provision for dividends 50000
• Interim dividend paid 20000
• 243700
• Less Opening Balance as per P&L A/c 100000
• Net Profit before tax 143700

• Investment A/c
• To balance b/d 164000 By Bank 3000
• To Bank 9000 By Balance 170000
• (Purchase of investment)
• 173000 173000
Intermediate Accounting 5 The Statement of Cash Flows

The End