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Cash Flow Statement Exercise

This document provides an example cash flow statement using the direct and indirect methods, along with additional relevant financial information. It includes a balance sheet, statement of profit and loss, and working notes to derive the cash flow statement figures. The purpose is to illustrate how to apply the accounting standard for a cash flow statement of an enterprise other than a financial one.

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Vikas Yadav
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243 views3 pages

Cash Flow Statement Exercise

This document provides an example cash flow statement using the direct and indirect methods, along with additional relevant financial information. It includes a balance sheet, statement of profit and loss, and working notes to derive the cash flow statement figures. The purpose is to illustrate how to apply the accounting standard for a cash flow statement of an enterprise other than a financial one.

Uploaded by

Vikas Yadav
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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72 AS 3 (revised 1997)

APPENDIX I

Cash Flow Statement for an Enterprise other than a


Financial Enterprise
The appendix is illustrative only and does notjorm part of the accounting
standard. The purpose of this appendix is to illustrate the application of the
accounting standard

1. The example shows only current period amounts.

2. Information from the statement of profit and loss and balance sheet is
provided to show how the statements of cash flows under the direct method
and the indirect method have been derived. Neither the statement of profit
and loss nor the balance sheet is presented in conformity with the disclosure
andpresentation requirements of applicable laws and accounting standards.
The working notes given towards the end of this appendix are intended to
assist in understanding the manner in which the various figures appearing
in the cash flow statement have been derived. These working notes do not
form part ofthe cash flow statement and, accordingly, need not be published.

3. The following additional information is also relevant for the preparation


of the statement of cash flows (figures are in Rs.'000).

(a) An amount of 250 was raised from the issue of share capitaland
a further 250 was raised from long term borrowings..

.(b)
b) Interest expense was 400 ofwhich 170 was paid during the period.
100 relating to interest expense of the prior period wa[ also
paid
during the period.

(c) Dividends paid were 1,200.

(d) Tax deducted at source on dividends received (included in the


tax expense of 300 for the year) amounted to 40.

(c) During the period, the enterprise acquired fixed assets for 350.
The payment was made in cash.

(f Plant with original cost of 80 and accumulated depreciation of


60 was sold for 20.
Cash Flow Statements 73

(8) Foreign exchange loss of 40 represents the reduction in the


carrying amount of a short-term investment in
designated bonds arising out of a change inforeign-currency
exchange rate
between the date of acquisition of the
investment and the
balance sheet date.

.(h) Sundry debtors and sundry creditors include


amounts relating to
credit sales and credit
purchases only.

Balance Sheet as at 31.12.1996

(Rs. 000)
1996 1995

Assets

Cash on hand and balances with banks 200 25


Short-term investments 670 135
Sundry debtors A. R.) 1,700 1,200
Interest receivable 100
Inventories 900 1,950
.Long-term investments 2,500 2,500
Fixed assets at cost 2,180 1,910
Accumulated depreciation (1,450) (1,060)
Fixed assets (net) 730 850
Total assets 6,800 6,660

Liabilities
Sundry creditors 150 1,890
Interest payable 230 100
Income taxes payable 400 1,000
Long-term debt 1,110 1,040
Total liabilities T,890 4,030

Shareholders' Funds
1,500 1,250
Share capital 1,380
Reserves 3,410
Total shareholders' funds 4,910 2,630
Total liabilities and shareholders' funds 6,800 6,660
74 AS 3 (revised 1997)
Statement of Profit and Loss for the period ended 31.12.1996

(Rs. 000)
Sales 30,650
Cost of sales (26,000)
Gross profit 4,650
Depreciation (450)
Administrative and selling expenses (910)
Interest expense (400)
Interest income 300
Dividend income 200
Foreign exchange loss (40)
Net profit before taxation and extraordinary item 3,350
Extraordinary item - Insurance proceeds from

earthquake disaster settlement 180


Net profit after extraordinary item 3,530
Income-tax (300)
Net profit 3,230

Direct Method Cash Flow Statement [Paragraph i8(a)


(Rs. 000)
1996
Cash flows from operating activities

Cash receipts from customers 30,150


Cash paid to suppliers and employees (27,600)
Cash generated from operations 2:550
not
Income taxes paid (860)
Cash flow before extraordinary item 1,690
Proceeds from earthquake disaster settlement 180
activities 1,870
Net cash from operating
Cash flows from investing activities

(350)
Purchase of fixed assets

Proceeds from sale of equipment 20


200
Interest received
160
Dividends received
activities 30
Net cash from investing

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