RANI SATI CLASSES (CA Chandan Agarwal)

Class 12 : Accountancy
Chapter 4 : Cash Flow Statement (Part B)

Cash Flow Statement is a statement that shows the cash flows, ie, inflow and
outflow of Cash and Cash Equivalents during the accounting period (usually
between two Balance Sheet dates) from operating, investing and financing
activities.
Transactions that increase Cash and Cash Equivalents are inflows of Cash and Cash
Equivalents and transactions that decrease it are outflows of Cash and Cash
Equivalents.
Cash Flow Statement is prepared as per Accounting Standard-3 (Revised).
The accounting standard prescribes that Cash Flow Statement be prepared either
by:
1. Direct Method (Not in Syllabus); or
2. Indirect Method;

Important Terms
 Cash - Cash comprises of Cash on Hand and demand deposits with banks.
 Cash Equivalents - Cash Equivalents are short-term, highly liquid investments
that are readily convertible into the known amount of cash and which are
subject to an insignificant risk of change in value. An investment normally
qualifies as cash equivalent only when it has a short maturity of, say, three
months or less from the date of acquisition. Current Investments, unless
specified otherwise, are taken as Marketable Securities and included in Cash
and Cash Equivalents.
 Operating Activities - Operating Activities are the principal revenue
producing activities of the enterprise and other activities that are not
Investing or Financing Activities.
 Investing Activities - Investing Activities are the acquisition and disposal of
Long-term Assets and other investments not included in cash equivalents.
  Financing Activities - Financing Activities are the activities that result in
change in the size and composition of the owners' capital (including
Preference Share Capital in the case of a company) and borrowings of the
enterprise.

Extraordinary Items - Extraordinary items are incomes and expenses that arise
from events or transactions that are clearly distinct from the ordinary business
activities of the enterprise and, therefore, are not expected to recur frequently or
regularly. Examples of Extraordinary items are:

 Operating Activities : Preliminary expenses, Compensation paid to employees

under Voluntary Retirement Scheme.
 Investing Activities : Claim received against damage of fixed assets say
because of earthquake.
 Financing Activities: Payment for buy-back of Shares.

Transactions not Regarded as Cash Flow

Transactions being movement between the components of Cash and Cash
Equivalents are not Cash Flow and thus it is not considered while preparing cash
flow statement because it reduces balance of one component of Cash and Cash
Equivalent and increases another component.
Examples:
 Cash/Cheques deposited into bank,
 Cash withdrawn from Bank, and
 Purchase/Sale of Short-term Marketable Securities, etc.

Non-cash Transactions
Non-cash Transactions are those transactions which do not involve cash and,
therefore, flow (inflow or outflow) of Cash and Cash Equivalent does not take
place. For example :
1. Issue of Bonus Shares
2. Conversion of Debentures into Shares
3. Issue of Equity Shares or Debentures for consideration other than cash, etc.
Treatment of Interest and Dividend
For a Non Financial Company
 Interest Received and Dividend Received = Investing Activity
 Interest Paid and Dividend paid = Financing Activity

For a Financial Company

 Interest Received, Dividend Received and Interest Paid = Operating Activity
 Dividend paid = Financing Activity

Treatment of Rent Paid & Rent Received

 Rent paid is an Operating Activity
 Rent received on property held as Investment = Investing Activity
 Rent Received by a Real Estate Company = Operating Activity
 Rent Received (If Question is Silent ) = Investing Activity

State a transaction that is always classified or shown as an Operating Activity.

Ans : Payment of Salaries, bonus, gratuity, etc

State a transaction that is always classified or shown as an Investing Activity.

Ans : Payment towards purchase of fixed assets, as it is not purchased for resale.

State a transaction that is always classified or shown as an Financing Activity.

Ans : Dividend paid

Give a transaction, a part of which is shown as an Investing Activity and part as

Financing Activity.

Ans : Payment for purchase of an asset in instalments under Hire-purchase System.

The instalment has two components, i.e., principal and interest. Principal is shown
as an Investing Activity and interest is shown as a Financing Activity.
 Calculation of Cash Flow from Operating Activities

Net Profit before Tax & Extraordinary Item XXX

Adjustment : Non Cash/Non Operating Item
Add : Depreciation / Amortisation xxx
Loss on Sale of Fixed Asset/Non Current Investment xxx
Interest on Loans/Debentures/Bank Overdraft xxx
Increase in Provision for Doubtful Debts xxx
Underwriting Commission/Share issue expense/Discount
on Issue of debenturtes off xxx
Less : Interest Received on Investment xxx
Dividend Received xxx
Rent Received xxx
Decrease in Provision for Doubtful Debts xxx
Gain on Sale of Fixed Asset/Non Current Investment xxx
Operating Profit Before Working Capital Changes xxx
Add : Decrease in CA and Increase in CL xxx
Less : Increase in CA and Decrease in CL xxx
Cash Geneated from Operations xxx
Less : Income Tax Paid ( Net of Tax Refund) xxx
Cash Flow before Extraordinary Items xxx
Add : Extraordinary Income xxx
Less : Extraordinay Expenses/Loss xxx
Cash flow from (or Used) in Operating Activities XXX

W.Note – Calculation of Net Profit before tax & Extraordinary Item

Diffrence between Surplus i.e Balance in Statement of Profit & Loss xxx
Add : Proposed Dividend (Previous Year) xxx
Interim Dividend Paid during the year xxx
Dividend on Preference share xxx
Transferred to Reserve xxx
Provision for tax made during the year xxx
Extraordinary Expense/Loss xxx
Less : Refund of Tax xxx
Extraordinary Income xxx
Net Profit before Tax & Extraordinary Item XXX
 Calculation of Cash Flow from Investing Activities

Proceeds from sale of Fixed Assets(tangible/Intangible) xxx

Proceeds from sale of Non Current Investment xxx
Loans and Advances repayment received xxx
Rent received from property held as Investment xxx
Interest Received xxx
Dividend Received xxx
Payment for Purchase of Fixed Assets(tangible/Intangible) (xxx)
Payment for purchase of Non Current Investment (xxx)
Loans and Advances given (xxx)
Cash flow from/(used) in Investing Activity xxx

Calculation of Cash Flow from Financing Activities

Proceeds from issue of shares (Including Securities Premium) xxx

Proceeds from Issue of Debentures (Including Securities Premium
but excluding discount) xxx
Loans received (Short term/Long term/Bank OD/Cash Credit) xxx
Repayment of Loans (Short term/Long term/Bank OD/Cash Credit) ) (xxx)
Payment for buy back of Equity shares (Extraordinary item) (xxx)
Payment for Redemption of Preference shares/Debentures (xxx)
Premium paid on redemption of Preference shares/Debenture (xxx)
Interim Dividend Paid during the year (xxx)
Final Dividend paid during the year (xxx)
Dividend paid on preference Shares (xxx)
Interest paid on Debentures/Loans (xxx)
Cash flow from/(used) in Financing Activity xxx
Preparation of Some Important Ledger Accounts

Preparation of Fixed Asset Account

Case 1 ) When Depreciation is credited to Fixed Asset A/c i.e Provision for
Depreciation/Accumulated Depreciation A/c is not Maintained.

Fixed Asset A/c

Particulars Amount Particulars Amount
To balance b/d xxx By Bank A/c (Sale) xxx
To Bank A/c (purchase) xxx By Loss on sale of Investment xxx
To Profit on sale of Fixed Assets By Depreciation A/c xxx
By balance c/d xxx
xxx Xxx

Case 2 ) When Depreciation is credited to Provision for Depreciation A/c

/Accumulated Depreciation i.e Provision for Depreciation/Accumulated
Depreciation A/c is maintained.

Fixed Asset A/c

Particulars Amount Particulars Amount
To balance b/d xxx By Bank A/c (Sale) xxx
To Bank A/c (purchase) xxx By Loss on sale of Investment xxx
To Profit on sale of Fixed Assets By Accumulated Dep A/c xxx
By balance c/d xxx
xxx Xxx

Accumulated Depreciation
Particulars Amount Particulars Amount
To Fixed Asset A/c xxx By Balance b/d xxx
(Transfer of Accumulated
depreciation on Fixed Asset sold) By Depreciation A/c xxx
(Depreciation for Current
To Balance c/d xxx Year)

xxx xxx
 Investment / Land A/c
Particulars Amount Particulars Amount
To balance b/d xxx By Bank A/c (Sale) xxx
To Bank A/c (purchase) xxx By Loss on sale of Investment xxx
To Profit on sale of Investment
By Balance c/d xxx
xxx xxx

Provision for Tax

Particulars Amount Particulars Amount
To Bank A/c (Tax Paid) xxx By Balance b/d xxx

To Balance c/d xxx By Statement of P/L xxx

(Provision Made during the year)
xxx xxx
 Practical Question (T.S.Grewal Book 2024-25 Edition)

Q 1. Identify the transactions as belonging to (i) Operating Activities, (ii) Investing Activities,
(iii) Financing Activities and (iv) Cash and Cash Equivalents:

(a) Cash Sale of Goods

(b) Cash Received against Revenue from Services rendered
(c) Cash Purchase of Goods
(d) Cash Paid against Services Taken
(e) Patents Purchased
(f) Marketable Securities
(g) Bank Overdraft
(h) Proceeds from Issue of Debentures
(i) Purchase of Shares
(j) Repayment of Long-term Loan
(k) Commission Received
(l) Redemption of Debentures
(m) Interest on Debentures
(n) Interest on Investments
(o) Income Tax Paid
(p) Income Tax Paid on Gain (Profit) on Sale of Asset
(q) Cash Received from Debtors
(r) Cash Paid to Creditors.

[Ans.: Operating Activities: (a), (b), (c), (d), (k), (o), (q), (r); Investing Activities: (e), (i), (n) (p);
Financing Activities: (g), (h), (j), (l), (m); Cash and Cash Equivalents: (f).]

Q 2. Classify the following transactions as Operating Activities for a finance company and a
non-finance company:

(a) Purchase of Shares on a Stock Exchange.

(b) Dividend received on Shares.
(c) Dividend paid on Shares.
(d) Loans given.
(e) Loans taken.
(f) Interest paid on borrowings.

[Ans.: Finance Company : (a), (b), (d), (e), (f); Non-finance Company : None.]
Q 3. State which of the following would result in inflow or outflow or no flow of Cash and Cash
Equivalents:
(a) Sale of Fixed Assets, Book Value Rs.1,00,000 at a profit of Rs.10,000.
(b) Sale of goods against cash.
(c) Purchase of machinery for cash.
(d) Purchase of Land and Building for Rs.10,00,000. Consideration paid by issue of
debentures.
(e) Issued fully paid Bonus Shares.
(f) Cash withdrawn from bank.
(g) Payment of Interim Dividend.

[Ans.: Inflow: (a), (b); Outflow: (c), (g); No flow: (d), (e), (f).]

Q 4. For each of the following transactions, calculate the resulting Cash Flow and state the
nature of Cash Flow, i.e., whether it is Operating, Investing or Financing Activity:
a) Acquired machinery for Rs.2,50,000 paying 20% by cheque and executing a bond for the
balance payable.
b) Paid Rs.2,50,000 to acquire shares in Inform Tech Ltd. and received a dividend of
Rs.50,000 after acquisition.
c) Sold machinery of original cost of Rs.2,00,000 with an accumulated depreciation of
Rs.1,60,000 for Rs.60,000.

[Ans.: (a) Rs.50,000: Investing Activity—Outflow; (b) Rs.2,00,000: Investing Activity—Outflow;

(c) Rs.60,000: Investing Activity—Inflow.]

Net Profit before Tax and Extraordinary Items

Q 5. Following is the extract from the Balance Sheet of Karishma Ltd. as at 31st March, 2023:
Equity and Liabilities 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
Surplus, i.e., Balance in Statement of Profit & Loss 10,00,000 5,00,000
Dividend Payable 50,000 ……..

Additional Information: Proposed Dividend for the years ended 31St March, 2022 and
2023 are Rs.4,00,000 and Rs.5,00,000 respectively.

Prepare the Note to show Net Profit before Tax and Extraordinary Items.
[Ans.: Net Profit before Tax and Extraordinary Items = Rs.9,00,000.]
Q 6. Following is the extract from the Balance Sheet of Mercury Ltd.:
Equity and Liabilities 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
Equity Share Capital 8,00,000 8,00,000
10% Preference Share Capital 6,00,000 6,00,000
Surplus, i.e., Balance in Statement of Profit & Loss 7,20,000 4,00,000
Unpaid Dividend 20,000 ……
Additional In formation:
(i) Proposed dividend on equity shares for the years 2021-22 and 2022-23 are
Rs.1,60,000 and Rs.2,00,000 respectively.
(ii) An Interim Dividend of Rs.40,000 on Equity Shares was paid.
Calculate Net Profit before Tax and Extraordinary Items.

[Ans.: Net Profit before Tax and Extraordinary Items = Rs.5,80,000.]

[Hint: Dividend on preference shares is paid before dividend is paid on equity shares.
Since dividend is paid (Proposed for 2021-22) on Equity Shares, dividend on Preference Shares
must have been paid. Therefore, Preference Dividend of Rs.60,000, i.e., 10% of Rs.6,00,000 will
also be added to determine Net Profit before Tax and Extraordinary Items.]

Q 7. From the following extract of Balance Sheet of Universal Ltd., calculate Net Profit before
Tax and Extraordinary Items:
Equity and Liabilities 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
Equity Share Capital 10,00,000 10,00,000
10% Preference Share Capital 10,00,000 10,00,000
Surplus, i.e., Balance in Statement of Profit & Loss 15,00,000 10,00,000

Additional Information:
Interim Dividend of Rs.2,00,000 was paid on Equity Shares on 1st November, 2022.
[Ans.: Net Profit before Tax and Extraordinary Items = Rs.8,00,000.]

[Hint: Dividend will be paid on 10% Preference Shares since Interim Dividend is paid.]
Q 8. Calculate Net Profit before Tax and Extraordinary Items of Shiva Ltd. from its Balance
Sheet as at 31st March, 2023:
Particulars Note 31st March, 31st March,
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 5,00,000 5,00,000
(b) Reserves and Surplus (Surplus, i.e., Balance 2,00,000 1,45,000
in Statement of Profit & Loss)
2. Current Liabilities
(a) Trade Payables 90,000 50,000
(b) Other Current Liabilities 20,000 10,000
(c) Short-term Provisions 1 50,000 30,000
Total 8,60,000 7,35,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
- Property, Plant and Equipment 4,50,000 4,00,000
(b) Non-Current Investments 1,50,000 1,50,000
2. Current Assets 2,60,000 1,85,000
Total 8,60,000 7,35,000

Note to Accounts
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
1. Short-term Provisions
Provision for Tax 50,000 30,000

Additional In formation:
(i) Proposed Dividend for the years ended 31st March, 2022 and 2023 are Rs.50,000
and Rs.75,000
respectively.
(ii) Interim Dividend paid during the year was Rs.10,000.

[Ans.: Net Profit before Tax and Extraordinary Items = Rs.1,65,000.]

Q 9. From the following information, calculate Net Profit before Tax and Extraordinary Items:

Surplus, i.e., Balance in Statement of Profit & Loss (Opening) Rs.1,00,000

Surplus, i.e., Balance in Statement of Profit & Loss (Closing) Rs.3,36,000
Dividend paid in the current year Rs.72,000
Interim Dividend Paid during the year Rs.90,000
Transfer to Reserve Rs.1,00,000
Provision for Tax for the current year Rs.1,50,000
Refund of Tax Rs.3,000
Loss due to Earthquake Rs.2,00,000
Insurance Proceeds from earthquake disaster settlement Rs.1,00,000
[Ans.: Net Profit before Tax and Extraordinary Items = Rs.745,000.]

Calculation of Operating Profit before Working Capital Changes

Q 10. From the following information, calculate Operating Profit before Working Capital
Changes:
Net Profit before Tax and Extraordinary Items Rs.4,47,000
Depreciation on Machinery Rs.84,000
Interest on Borrowings Rs.16,800
Goodwill Amortised Rs.18,600
Loss on Sale of Furniture Rs.18,000
Premium on Redemption of Preference Shares Rs.6,000
Gain (Profit) on Sale of Investments Rs.12,000
Interest and Dividend Received on Investments Rs.27,600

[Ans.: Operating Profit before Working Capital Changes = Rs.5,44,800.]

Q 11. From the following Balance Sheet of KBC Ltd. as at 31st March, 2023 and additional
information, calculate Operating Profit before Working Capital Changes:
Particulars Note 31st March, 31st March,
No. 2023(Rs.) 2022(Rs.)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 5,00,000 5,00,000
(b) Reserves and Surplus 1 6,70,000 5,00,000
2. Current Liabilities
(a) Trade Payables 60,000 50,000
(b) Other Current Liabilities (O/s Expenses) 20,000 15,000
(c) Short-term Provisions (Provision for Tax) 1,00,000 90,000
Total 13,50,000 11,55,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
—Property, Plant and Equipment 7,50,000 7,30,000
(b) Non-Current Investments 2,50,000 3,00,000
2. Current Assets 3,50,000 1,25,000
Total 13,50,000 11,55,000

Note to Accounts
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
1. Reserves and Surplus
General Reserve 5,00,000 4,00,000
Surplus, i.e., Balance in Statement of Profit & Loss 1,70,000 1,00,000
6,70,000 5,00,000

Additional Information: Depreciation for the year was Rs.75,000.

[Ans.: Operating Profit before Working Capital Changes = Rs.3,45,000.]

Cash Flow from Operating Activities

Q 12. Calculate Cash Flow from Operating Activities from the following details:
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
Surplus, i.e., Balance in Statement of Profit & Loss 80,000 60,000
Trade Receivables 25,000 31,000
Provision for Depreciation 40,000 30,000
Inventories 80,000 60,000
Outstanding Rent 12,000 21,000
Goodwill 30,000 38,000
Prepaid Insurance 1,000 2,000
Trade Payables (Creditors) 13,000 19,000

[Ans.: Cash Flow from Operating Activities = Rs.10,000.]

[Hint: Decrease in goodwill will be added to Net Profit before Tax while calculating Cash Flow
from Operating Activities, it being Non-Cash/Non-Operating item.]

Q 13. Compute Cash Flow from Operating Activities from the following information:
Particulars Rs.
Net Profit after Provision for Tax and Payment of Dividend 2,15,000
Provision for Tax 45,000
Final Dividend paid during the year 50,000
Depreciation 25,000
Loss on Sale of Machinery 10,000
Patents Amortised 30,000
Gain (Profit) on Sale of Land 70,000
Income Tax Refund 30,000

[Ans.: Cash Flow from Operating Activities = Rs.2,60,000.]

Q 14. Calculate Cash Flow from Operating Activities from the following:

(i) Profit for the year is Rs.7,00,000 after considering the following items:
Particulars Rs.
Depreciation on Fixed Assets 40,000
Goodwill Amortised 20,000
Gain (Profit) on Sale of Land 90,000
Appropriation of Profit towards General Reserve 60,000
 (ii) Following is the position of Current Assets and Current Liabilities:
Particulars Closing Opening
Balance (Rs.) Balance (Rs.)
Trade Payables 50,000 75,000
Trade Receivables 75,000 60,000
Prepaid Expenses 10,000 18,000

[Ans.: Cash Flow from Operating Activities = Rs.6,98,000.]

Q 15. Charles Ltd. earned a profit of Rs.1,00,000 after charging depreciation of Rs.20,000 on
assets and a transfer to General Reserve of Rs.30,000. Goodwill amortised was Rs.7,000
and gain on sale of machinery was Rs.3,000. Other information available is (changes in
the value of Current Assets and Current Liabilities): trade receivables showed an
increase of Rs.3,000; trade payables an increase of Rs.6,000; Prepaid expenses an
increase of Rs.200; and outstanding expenses a decrease of Rs.2,000.
Ascertain Cash Flow from Operating Activities.
[Ans.: Cash Flow from Operating Activities = Rs.1,54,800; Net Profit before Tax — Rs.1,30,000.]

Q 16. From the following information, calculate Cash Flow from Operating Activities:
Particulars 31st March 31st March
2022 (Rs.) 2023 (Rs.)
Equity Share Capital 20,00,000 30,00,000
10% Preference Share Capital 2,00,000 1,00,000
Securities Premium ……. 95,000
Surplus, i.e. Balance in Statement of Profit & Loss 4,00,000 8,00,000
10% Debentures 10,00,000 10,00,000

Additional In formation:
(i) Preference shares were redeemed on 31st March, 2023 at a premium of 5%.
(ii) Dividend on equity shares was paid @ 8%.
(iii) Fresh issue of equity shares was made on 1st April 2022.

[Ans.: Cash Flow from Operating Activities = Rs.7,60,000.]

Q 17. Sunrise Ltd., reported Net Profit after Tax of Rs.6,40,000 for the year ended 31st March,
2023. The relevant extract from Balance Sheet as at 31st March, 2023 is:
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
Inventories 1,15,000 1,25,000
Trade Receivables 1,50,000 1,10,000
Prepaid Expenses 20,000 6,000
Trade Payables 1,10,000 80,000
Provision for Tax 20,000 15,000

Depreciation charged on Plant and Machinery Rs.55,000, insurance claim received

Rs.50,000, gain (profit) on sale of investment Rs.20,000 appeared in the Statement of
Profit & Loss for the year ended 31st March, 2023.
Calculate Cash Flow from Operating Activities.
[Ans.: Cash Flow from Operating Activities = Rs.6,66,000.]

Q 18. Compute Cash Flow from Operating Activities from the following:
(i) Profit for the year ended 31st March, 2023 is Rs.10,000 after providing for
depreciation of Rs.2,000.
(ii) Current Assets and Current Liabilities of the business for the years ended 31st
March, 2022 and 2023 are as follows:
Particulars 31st March 31st March
2022 (Rs.) 2023 (Rs.)
Trade Receivables 14,000 15,000
Provision for Doubtful Debts 1,000 1,200
Trade Payables 13,000 15,000
Inventories 5,000 8,000
Other Current Assets (Other than Prepaid Expenses and
Accrued Income) 10,000 12,000
Expenses Payables 1,000 1,500
Prepaid Expenses 2,000 1,000
Accrued Income 3,000 4,000
Income Received in Advance 2,000 1,000

[Ans.: Cash Flow from Operating Activities = Rs.7,700]

 Q 19. Calculate Cash Flow from Operating Activities from the following information:
Particulars Rs.
Net Profit (Difference between Closing and Opening Balance of Surplus, i.e.,
Balance in Statement of Profit & Loss) 8,00,000
Final Dividend paid in the year 1,10,000
Compensation for Natural Disaster credited to Statement of Profit & Loss 75,000
Depreciation 1,50,000
Loss on Sale of Investment 30,000
Gain (Profit) on Sale of Land 90,000
Provision for Tax 1,10,000
Dividend Received 20,000
Decrease in Current Assets (Other than Cash and Cash Equivalents) 40,000
Increase in Current Liabilities (Other than Bank Overdraft and Cash Credit) 70,000
Decrease in Current Liabilities )Other than Bank Overdraft and Cash Credit) 10,000
Increase in Current Assets (Other than Cash and Cash Equivalents) 60,000
Income Tax Refund 10,000
Income Tax Paid 1,20,000

[Ans.: Cash Flow from Operating Activities = Rs.10,10,000.]

Q 20. Following information is related to Vishwas Ltd.:

STATEMENT OF PROFIT & LOSS for the year ended 31st March, 2023
Particulars Note Rs.
No.
I. Revenue from Operations (Net Sales) 30,00,000
II. Other Income 1 45,000
III. Total Revenue (I + II) 30,45,000
IV. Expenses:
(a) Purchases of Stock-in-Trade 23,03,000
(b) Change in Inventories of Stock-in-Trade 2 (16,000)
(c) Depreciation and Amortisation Expenses 1,85,000
(d) Other Expenses 3 3,29,000
Total Expenses 28,01,000
V. Profit before Tax (III — IV) 2,44,000
VI. Less: Provision for Tax 64,000
VII. Profit after Tax (V — VI) 1,80,000
 Notes to Accounts
Particulars Rs.
1. Other Income
(a) Dividend Received 5,000
(b) Gain (Profit) on Sale of Plant 40,000
45,000
2. Change in Inventories of Stock-in-Trade
Opening Inventories 2,84,000
Less: Closing Inventories 3,00,000
(16,000)
3. Other Expenses
(a) Office Expenses 58,000
(b) Selling Expenses 2,35,000
(c) Loss on Sale of Assets 36,000
3,29,000

Other Information: Balance as on Balance as on

31st March, 2023 (Rs.) 31st March, 2022 (Rs.)
Trade Payables 2,78,000 2,50,000
Trade Receivables 4,52,000 4,15,000
Office Expenses Outstanding ……… 5,000
Selling Expenses Outstanding 25,000 22,000

Calculate Cash Flow from Operating Activities.

[Ans.: Cash Flow from Operating Activities = Rs.3,29,000.]

Cash Flow from Investing Activities

Q 21. From the following information, calculate the amount of Cash Flow from Investing
Activities:
Acquired machinery for Rs.10,00,000, paying 10% immediately in cash and accepting a
draft for the balance in favour of the vendor, payable after three months. (CBSE 2020)

[Ans.: Cash Used in Investing Activities - Rs.1,00,000.]

[Hint: Draft (Bill Payable) does not involve cash outflow.]

Q 22. Mars Ltd. has Plant and Machinery whose written down value on 1st April, 2022 was
Rs.9,60,000 and on 31st March, 2023 was Rs.10,50,000. Depreciation for the year was
Rs.35,000. In the beginning of the year, a part of plant was sold for Rs.45,000 which had
a written down value of Rs.30,000.
Calculate Cash Flow from Investing Activities.
[Ans.: Cash Used in Investing Activities = Rs.1,10,000.]
Q 23. From the following information, calculate Cash Flow from investing Activities:
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
Investment in 10% Debentures 10,00,000 5,00,000
Land and Building 15,00,000 9,00,000
Additional In formation:
1. Half of the investments held in the beginning of the year were sold at 10% profit.
2. Depreciation on Land and Building was Rs.50,000 for the year.
3. Interest received on investments Rs.75,000.
[Ans.: Cash Used in Investing Activities Rs.10,50,000.]

Q 24. From the following information, calculate Cash Flow from Investing Activities:
Particulars Closing Opening
Balance (Rs.) Balance (Rs.)
Machinery (At Cost) 10,00,000 9,50,000
Accumulated Depreciation 1,50,000 1,10,000
Patents 2,00,000 3,00,000
Additional Information:
1. During the year, machine costing Rs.90,000 with accumulated depreciation of
Rs.60,000 was sold for Rs.50,000.
2. Patents written off were Rs.50,000 while a part of patents were sold at a profit of
Rs.40,000.
[Ans.: Cash Flow from Investing Activities = Nil.]

Q 25. Welprint Ltd. has given the following information:

Machinery as on 1st April, 2022 Rs.50,000

Machinery as on 31st March, 2023 Rs.60,000
Accumulated Depreciation on 1st April, 2022 Rs.25,000
Accumulated Depreciation on 31st March, 2023 Rs.15,000

During the year, a machine costing Rs.25,000 (accumulated depreciation thereon

Rs.15,000) was sold for Rs.13,000.
Calculate Cash Flow from Investing Activities on the basis of the above information.
[Ans.: Cash Used in Investing Activities = Rs.22,000.]
Q 26. From the following extracts of a company, calculate Cash Flow from Investing Activities:
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
Goodwill 75,000 1,00,000
Patents 1,00,000 75,000
Land 90,000 1,00,000
Furniture 2,46,000 21,000
Plant and Machinery (Net) 2,00,000 2,00,000
10% Investments 1,80,000 2,00,000
Accrued Interest on Investments 6,000 ……
Additional Information: Investment is sold at book value on 31st March, 2023.
[Ans.: Cash Used in Investing Activities = Rs.2,06,000.]

[Hints: 1. Since investment is sold at book value, there is neither gain (profit) nor loss.
2. Interest received on Investments = 10% of Rs.2,00,000 – Rs.6,000 = Rs.14,000.]

Q 27. From the following information, calculate Cash Flow from Investing Activities:
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
Plant and Machinery 10,00,000 8,50,000
Investment (Long-term) 1,00,000 40,000
Land (At cost) 1,00,000 2,00,000
Additional Information:
1. Depreciation charged on Plant and Machinery Rs.50,000.
2. Plant and Machinery with a Book Value of Rs.60,000 was sold for Rs.40,000.
3. Land was sold at a profit of Rs.60,000.
4. No investment was sold during the year.
[Ans.: Cash Used in Investing Activities = Rs.1,20,000.]

Q 28. From the following particulars, calculate Cash Flow from Investing Activities:
Particulars Purchased Sold
(Rs.) (Rs.)
Machinery 6,20,000 2,00,000
Investments 2,40,000 80,000
Goodwill 1,00,000 …..
Patents ….. 1,50,000
Additional Information:
1. Interest received on debentures held as investment Rs.8,000.
2. Interest paid on debentures issued Rs.20,000.
3. Dividend received on shares held as investment Rs.20,000.
 4. Dividend paid on Equity Share Capital Rs.30,000.
5. A plot of land was purchased out of the surplus funds for investment purposes
and was let out for commercial use. Rent received Rs.50,000 during the year.

[Ans.: Cash Used in Investing Activities = Rs.4,52,000.]

Q 29. Calculate Cash Flow from Investing Activities from the following information:
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
Investments in Land 3,00,000 3,00,000
Shares in Damodar Ltd. 1,50,000 1,50,000
12% Long-term Investments 80,000 50,000
Plant and Machinery 7,50,000 6,00,000
Patents 70,000 1,00,000
Goodwill 1,50,000 1,00,000
Additional Information:
1. A piece of land was purchased as an investment out of surplus. It was let out for
commercial purpose and the rent received was Rs.20,000.
2. Dividend received from Damodar Ltd. @ 12%.
3. Patents written off to the extent of 20,000. Some patents were sold at a profit of
Rs.10,000.
4. A machine costing Rs.80,000 .(depreciation provided thereon Rs.30,000) was sold
for Rs.35,000. Depreciation charged during the year was Rs.70,000.
5. During the year 12% investments were purchased for Rs.1,00,000 and some
investments were sold at a profit of Rs.10,000. Interest on investments for the
year was duly received.
[Ans.: Cash Used in Investing Activities = Rs.2,4 1,000.]
[Hints: 1. Interest on Investments = Rs.50,000 × 12/1 00 = Rs.6,000.
2. Dividend from Damodar Ltd. = Rs.1,50,000 × 12/100 Rs.18,000.
3. Sale of Investment = Cost of Investment Sold + Profit on Sale =
Rs.70,000 + Rs.10,000 = Rs.80,000.
4. Sale of Patents = Rs.10,000 (Cost) + Rs.10,000 = Rs.20,000.

5. Dr. PLANT AND MACHINERY ACCOUNT Cr.

Particulars Rs. Particulars Rs.
To Balance b/d 6,00,000 By Bank A/c (Sale) 35,000
To Bank A/c (Purchase) 2,70,000 By Loss on Sale of Machinery A/c* 15,000
(Balancing Figure) (Statement of Profit & Loss)
By Depreciation A/c 70,000
By Balance c/d 7,50,000
8,70,000 8,70,000
Cash Flow from Operating and Investing Activities

Q 30. From the following information, calculate Cash Flow from Operating Activities and
Investing Activities:
Particulars 31st March 31st March
2022 (Rs.) 2023 (Rs.)
Surplus, i.e., Balance in Statement of Profit & Loss 1,00,000 4,00,000
Provision for Tax 30,000 30,000
Trade Payables 40,000 1,50,000
Current Assets (Inventories and Trade Receivables) 4,60,000 5,20,000
Fixed Assets (Net) 3,25,000 3,92,000
Additional In formation:
1. Depreciation of Rs.80,000 was provided and a machine costing Rs.1,05,000
(Depreciation provided thereon Rs.65,000) was sold at a loss of Rs.8,000.
2. Tax paid during the year Rs.30,000.

[Ans.: Cash Flow from Operating Activities = Rs.4,38,000.

Cash Used in Investing Activities = Rs.1,55,000.]

Q 31. From the following information, calculate Cash Flow from Operating Activities and
Investing Activities:
Particulars 31st March 31st March
2022 (Rs.) 2023 (Rs.)
Surplus, i.e., Balance in Statement of Profit & Loss 2,50,000 10,00,000
Provision for Tax 75,000 75,000
Trade Payables 1,00,000 3,75,000
Current Assets (Trade Receivables and Inventories) 11,50,000 13,00,000
Property, Plant and Equipment and Intangible Assets:
Property, Plant and Equipment 21,25,000 23,30,000
Accumulated Depreciation 10,62,500 11,00,000
Additional In formation:
1. A machine having book value of Rs.1,00,000 (Depreciation provided thereon
Rs.1,62,500) was sold at a loss of Rs.20,000.
2. Tax paid during the year Rs.75,000.

[Ans.: Cash Flow from Operating Activities = Rs.10,95,000;

Cash Used in Investing Activities = Rs.3,87,500.]
Cash Flow from Financing Activities
Q 32. From the following information, calculate Cash Flow from Financing Activities:
1st April, 2022 31st March,2023
Long-term Loan 2,00,000 2,50,000
During the year, the company repaid a loan of Rs.1,00,000.
[Ans.: Cash Flow from Financing Activities = Rs.50,000.]
[Hint:
Dr. Long Term Loan A/c Cr.
Particulars Rs. Particulars Rs.
To Bank A/c A/c (Loan repaid) 1,00,000 By Bank b/d 2,00,000
To Bank c/d 2,50,000 By Bank A/c (New loan raised) 1,50,000
(Bal. Fig.)
3,50,000 3,50,000

Q 33. From the following information, calculate Cash Flow from Financing Activities:
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
Equity Share Capital 10,00,000 9,00,000
Securities Premium Reserve 2,60,000 2,50,000
12% Debentures 1,00,000 1,50,000
Additional Information: Interest paid on debentures Rs.18,000.
[Ans.: Cash Flow from Financing Activities Rs.42,000.]
Q 34. Jalco Ltd. provided the following information, calculate Net Cash Flow from Financing
Activities:
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
Equity Share Capital 12,00,000 10,00,000
12% Debentures 2,00,000 1,00,000
Additional In formation:
1. Interest paid on debentures Rs.19,000.
2. Dividend paid in the year Rs.50,000.
3. During the year, Jalco Ltd. issued bonus shares in the ratio of 5 : 1 by capitalizing
reserve.
[Ans.: Cash Flow from Financing Activities Rs.31,000.]
[Hint: Increase in Equity Share Capital by Rs.2,00,000 by issue of bonus shares will not
be shown under Cash Flow from Financing Activities because cash is not transacted. It is
Capitalisation of Reserves.]
Q 35. From the following extracts of Balance Sheets of Exe Ltd., calculate Cash Flow from
Financing Activities:
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
Equity Share Capital 5,25,000 4,00,000
10% Preference Share Capital 4,00,000 5,50,000
Debentures Redemption Reserve 1,00,000 1,00,000
12% Debentures 4,00,000 3,00,000

Additional In formation:
1. Equity Shares were issued on 31st March, 2023.
2. Interim dividend on Equity Shares was paid @ 15%.
3. Preference Shares were redeemed on 31st March, 2023 at a premium of 5%.
4. 12% Debentures of face value Rs.1,00,000 were issued on 31st March, 2023.

[Ans.: Cash Used in Financing Activities Rs.83,500.]

Cash Flow from Investing and Financing Activities

Q 36. From the following information, calculate Cash Flow from Investing and Financing
Activities:
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
Machinery (At cost) 50,000 40,000
Accumulated Depreciation 12,000 10,000
Capital 35,000 30,000
Bank Loan …… 10,000

During the year, a machine costing Rs.10,000 was sold at a loss of Rs.2,000. Depreciation
on machinery charged during the year amounted to Rs.6,000.

[Ans.: Investing Activities: Purchase of Machine = Rs.20,000; Sale of Machine = Rs.4,000;

Cash Used in Investing Activities = Rs.16,000; Financing Activities : Additional Capital Rs.5,000;
Repayment of Bank Loan = Rs.10,000; Cash Used in Financing Activities = Rs.5,000.]
Q 37. From the following information, calculate (a) Cash Flow from Investing Activities; and (b)
Cash Flow from Financing Activities:
Particulars 31st March 31st March
2022 (Rs.) 2023 (Rs.)
Plant and Machinery 8,50,000 10,00,000
Non-Current Investments 40,000 1,00,000
Land (at Cost) 2,00,000 1,00,000
Equity Share Capital 20,00,000 30,00,000
10% Preference Share Capital 2,00,000 1,00,000
Securities Premium ….. 1,00,000
10% Debentures 10,00,000 10,00,000

Additional Information:
(i) Depreciation charged on Plant and Machinery was Rs.50,000.
(ii) Plant and Machinery of book value Rs.60,000 was sold for Rs.40,000.
(iii) Land was sold at a gain of Rs.60,000.
(iv) Preference Shares were redeemed on 31st March, 2023 at a premium of 5%.
(v) Dividend on Equity Shares and Preference Shares for the year ended 31st March,
2022 was Nil and for the year ended 31st March, 2023 Proposed Dividend on
Equity Shares was 10%.
(vi) Fresh issue of Equity Shares was on 1st April, 2022.

[Ans.: Cash Used in Investing Activities = Rs.1,20,000;

Cash Flow from Financing Activities = Rs.8,95,000.]
Cash Flow Statement

Q 38. From the following information, prepare Cash Flow Statement:

Particulars Rs.
Opening Cash and Bank Balances 1,50,000
Closing Cash and Bank Balances 1,70,000
Decrease in Inventories 80,000
Increase in Bills Payable 1,20,000
Sale of Fixed Assets 3,00,000
Repayment of Long-term Loan 5,00,000
Net Profit for the Year 20,000

[Ans.: Cash Flow from Operating Activities = Rs.2,20,000; Cash Flow from Investing Activities =
Rs.3,00,000; Cash Used in Financing Activities = Rs.5,00,000;
Net Increase in Cash and Cash Equivalents Rs.20,000.
Q 39. From the following Balance Sheet of Young India Ltd., prepare Cash Flow Statement:

BALANCE SHEET OF YOUNG INDIA LTD.

as at 31st March, 2023
Particulars Note No. 31st March 31st March
2023 (Rs.) 2022 (Rs.)
I. EQUITYANDLIABILITIES
1. Share holders Funds
(a) Share Capital 2,50,000 2,00,000
(b) Reserves and Surplus (Surplus, i.e., Balance in
Statement of Profit & Loss) 1,83,000 82,000
2. Non-Current Liabilities
Long-term Borrowings:
15% Debentures 80,000 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 and
Intangible Assets:
—Property, Plant and Equipment 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

[Ans.: Cash Flow from Operating Activities . Rs.1,22,500; Cash Used in Investing Activities =
Rs.1,70,000; Cash Flow from Financing Activities = Rs.72,500; Net Increase in
Cash and Cash Equivalents = Rs.25,000.]

[Hint: Interest paid on debentures Rs.7,500 (i.e., Rs.50,000 × 15/100) is Financing Activity. It
has been assumed that the additional 15% Debentures have been issued at the end of the
current accounting year.]
Q 40. Prepare Cash Flow Statement on the basis of the information given in the Balance
Sheets of Nidhi Ltd. as at 31st March, 2023 and 31st March 2022:
Particulars Note 31st March, 31st March,
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITY AND LIABILITIES
1. Share holders Funds
(a) Share Capital 8,00,000 6,00,000
(b) Reserves and Surplus 1 4,00,000 3,00,000
2. Non-Current Liabilities
Long-term Borrowings 1,00,000 1,00,000
3. Current Liabilities
(a) Short-term Borrowings 2 ….. 50,000
(b) Trade Payables 40,000 48,000
Total 13,40,000 10,98,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
—Property, Plant and Equipment 8,50,000 5,60,000
(b) Non-Current Investments 2,32,000 1,60,000
2. Current Assets
(a) Current Investments, 50,000 1,34,000
(b) Inventories 76,000 82,000
(c) Trade Receivables 38,000 92,000
(d) Cash and Cash Equivalents 94,000 72,000
Total 13,40,000 10,98,000

Notes to Accounts
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit & Loss 4,00,000 3,00,000
2. Short-term Borrowings
Current Maturities of Long-term Debts ……. 50,000

[Ans.: Cash Flaw from Operating Activities = Rs.1,52,000;

Cash Used in Investing Activities — Rs.3,62,000;
Cash Flow from Financing Activities = Rs.1,50,000;
Net Decrease in Cash and Cash Equivalents = Rs.60,000.]
[Hint: Cash and Cash Equivalents:

Particulars Rs. Rs.

Opening Balance of Cash and Cash Equivalents:
Current Investments 1,34,000
Cash and Cash Equivalents 70,000 2,04,000
Closing Balance of Cash and Cash Equivalents:
Current Investments 50,000
Cash and Cash Equivalents 94,000 1,44,000

Cash Flow Statement with Adjustments

41. Balance Sheet of Bright Ltd. as at 31st March, 2023 is as follows:

Particulars Note 31st March 31st March
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 2,00,000 2,00,000
(b) Reserves and Surplus: Surplus, i.e., 98,000 96,000
Balance in Statement of Profit & Loss
2. Non-Current Liabilities
Long-term Borrowings 1 90,000 50,000
3. Current Liabilities
(a) Short-term Borrowings (Loan from Bank) …. 10,000
(b) Trade Payables 82,000 72,000
Total 4,70,000 4,28,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment and Intangible
Assets: - Property, Plant and Equipment 2 3,42,000 3,00,000
2. Current Assets
(a) Inventories 44,000 50,000
(b) Trade Receivables 76,800 70,000
(c) Cash and Cash Equivalents 7,200 8,000
Total 4,70,000 4,28,000
Notes to Accounts
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
1. Long-term Borrowings
Loan from A man Ltd. 40,000 …..
Loan from Bank 50,000 50,000
90,000 50,000
2. Property, Plant and Equipment 31.3.2023 (Rs.) 31.3.2022 (Rs.)
(i) Lan 60,000 40,000
(ii) Building 1,10,000 1,00,000
(iii) Machinery 2,44,000 2,14,000
Less: Accumulated Depreciation 72,000 54,000 1,72,000 1,60,000
3,42,000 3,00,000

Additional In formation: During the year Rs.52,000 were paid as interim dividend.
Prepare Cash Flow Statement.

[Ans.: Cash Flow from Operating Activities = Rs.81,200; Cash Used in Investing Activities =
Rs.60,000; Cash Used in Financing Activities = Rs.22,000; Net Decrease in Cash and Cash
Equivalents = Rs.800.]

Q 42. Following are the Balance Sheets of Solar Power Ltd. as at 31st March, 2023 and 2022:
Solar Power Ltd.
BALANCE SHEET
Particulars Note 31st March 31st March
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITYAND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 24,00,000 22,00,000
(b) Reserves and Surplus 1 6,00,000 4,00,000
2. Non-Current Liabilities
Long-term Borrowings 4,80,000 3,40,000
3. Current Liabilities
(a) Trade Payables 3,58,000 4,08,000
(b) Short-term Provisions 1,00,000 1,54,000
Total 39,38,000 35,02,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment and Intangible
Assets:
(i) Property, Plant and Equipment 2 21,40,000 17,00,000
 (ii) Intangible Assets 3 80,000 2,24,000
2. Current Assets
(a) Current Investments 4,80,000 3,00,000
(b) Inventories 2,58,000 2,42,000
(c) Trade Receivables 3,40,000 2,86,000
(d) Cash and Cash Equivalents 6,40,000 7,50,000
Total 39,38,000 35,02,000

Notes to Accounts
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit & Loss 6,00,000 4,00,000
2. Property, Plant and Equipment
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

Additional In formation:
During the year, a piece of machinery costing Rs.48,000 on which accumulated depreciation
was Rs.32,000, was sold fort Rs.12,000.
Prepare Cash Flow Statement.

[Ans.: Cash Flow from Operating Activities = Rs.3,06,000; Cash Used in Investing Activities
Rs.5,76,000; Cash Flow from Financing Activities Rs.3,40,000; Net Increase in Cash and Cash
Equivalents = Rs.70,000.]

[Hint: Short-term Provision is Provision for Tax.]

Q 43. Following is the Balance Sheet of Fine Products Ltd. as at 31st March, 2023:
Particulars Note 31st March 31st March
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital: Equity Share Capital 3,50,000 3,00,000
(b) Reserves and Surplus 1 57,000 38,000
2. Current Liabilities
(a) Trade Payables 53,000 35,000
(b) Other Current Liabilities 6,000 8,000
(c) Short-term Provisions 2 32,000 28,000
Total 4,98,000 4,09,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
(i) Property, Plant and Equipment 3 2,48,000 2,00,000
(ii) Intangible Assets (Goodwill) 40,000 50,000
(b) Non-Current Investments 35,000 10,000
2. Current Assets
(a) Inventories 39,000 57,000
(b) Trade Receivables 1,08,000 75,000
(c) Cash and Bank Balances 28,000 17,000
Total 4,98,000 4,09,000

Notes to Accounts
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
1. Reserves and Surplus
General Reserve 30,000 20,000
Surplus, i.e., Balance in Statement of Profit & Loss 27,000 18,000
57,000 38,000
2. Short-term Provisions
Provision for Tax 32,000 28,000
3. Property, Plant and Equipment
Land and Building 57,000 1,10,000
Plant and Machinery 1,91,000 90,000
2,48,000 2,00,000

Note: Proposed dividend on equity for the years ended 31st March, 2022 and 2023 are
Rs.39,000 and Rs.45,000 respectively.
You are required to prepare Cash Flow Statement for the year ended 31st March, 2023.

[Ans.: Cash Flow from Operating Activities = Rs.73,000; Cash Used in Investing Activities =
Rs.73,000; Cash Flow from Financing Activities = Rs.11,000; Net In crease in Cash and Cash
Equivalents = Rs.11,000.]

Q. 44. Following is the Balance Sheet of Mevanca Limited as at 31st March, 2017:
Mevanca Limited
BALANCE SHEET as at 31st March, 2017
Particulars Note 31st March 31st March
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITYAND LIABILITIES
1. Share holders Funds
(a) Share Capital 3,00,000 1,00,000
(b) Reserves and Surplus 1 25,000 1,20,000
2. Non-Current Liabilities
Long-term Borrowings 2 80,000 60,000
3. Current Liabilities
(a) Trade Payables 6,000 20,000
(b) Short-term Provisions 3 68,000 70,000
Total 4,79,000 3,70,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment and Intangible
Assets:
—Property, Plant and Equipment 4 3,36,000 1,92,000
2. Current Assets
(a) Inventories 67,000 60,000
(b) Trade Receivables 51,000 65,000
(c) Cash and Cash Equivalents 25,000 49,000
(d) Other Current Assets ….. 4,000
Total 4,79,000 3,70,000

Notes to Accounts
Particulars 31st March 31st March
2017 (Rs.) 2016 (Rs.)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit & Loss 25,000 1,20,000
2. Long-term Borrowings
10% Long-term Loan
80,000 60,000
 3. Short-term Provisions
Provision for Tax 68,000 70,000
4. Property, Plant and Equipment
Machinery 3,84,000 2,15,000
Accumulated Depreciation (48,000) (23,000)
3,36,000 1,92,000

Additional Information:
(i) Additional loan was taken on 1st July, 2016.
(ii) Tax of Rs.53,000 was paid during the year.
Prepare Cash Flow Statement.
[Ans.: Cash Used in Operating Activities = Rs.67,500; Cash Used in Investing Activities =
Rs.1,69,000; Cash Flow from Financing Activities = Rs.2, 12,500; Net Decrease in Cash and
Cash Equivalents = Rs.24,000.]

Q 45. Following is the Balance Sheet of X Ltd. as at 31st March, 2018:

BALANCE SHEET OF X LTD. as at31st March, 2018
Particulars Note 31st March 31st March
No. 2018 (Rs.) 2017 (Rs.)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 19,00,000 17,00,000
(b) Reserves and Surplus 1 6,00,000 3,00,000
2. Non-Current Liabilities
Long-term Borrowings 2 5,00,000 4,00,000
3. Current Liabilities
(a) Short-term Borrowings 3 1,70,000 1,75,000
(b) Short-term Provisions 4 2,00,000 1,65,000
Total 33,70,000 27,40,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
(i) Property, Plant and Equipment 5 24,00,000 19,00,000
(ii) Intangible Assets 6 2,00,000 3,00,000
(b) Non-Current Investments 3,00,000 2,00,000
2. Current Assets
(a) Current Investments 1,40,000 1,70,000
(b) Inventories 2,60,000 1,30,000
(c) Cash and Cash Equivalents 70,000 40,000
Total 33,70,000 27,40,000
 Notes to Accounts
Particulars 31st March 31st March
2018 (Rs.) 2017 (Rs.)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit & Loss 6,00,000 3,00,000

2. Long-term Borrowings
12% Debentures 5,00,000 4,00,000

3. Short-term Borrowings
Bank Overdraft 1,70,000 1,75,000

4. Short-term Provisions
Provision for Tax 2,00,000 1,65,000

5. Property, Plant and Equipment

Machinery 26,00,000 20,00,000
Less: Accumulated Depreciation (2,00,000) (1,00,000)
24,00,000 19,00,000
6. Intangible Assets
Goodwill 2,00,000 3,00,000

Additional Information:
(i) Rs.1,00,000, 12% Debentures were issued on 1st April, 2017.
(ii) During the year, a piece of machinery costing Rs.80,000 on which accumulated
depreciation was Rs.40,000 was sold at a gain of Rs.10,000.
Prepare a Cash Flow Statement.

[Ans.: Cash Flow from Operating Activities = Rs.4,95,000; Cash Used in Investing Activities =
Rs.7,30,000; Cash Flow from Financing Activities = Rs.2,35,000; Net Increase/Decrease in Cash
and Cash Equivalents = Nil.]
[Hints:

1. Dr. MACHINERY ACCOUNT Cr.

Particulars Rs. Particulars Rs.
To Balance b/d 20,00,000 By Bank A/c (Sale) 50,000,
To Gain on Sale of Machinery A/c 10,000 By Accumulated Depreciation A/c 40,000
(Statement of Profit & Loss) By Balance c/d 26,00,000
To Bank A/c (Purchase) – Bal fig. 6,80,000
26,90,000 26,90,000
2. Dr. Accumulated Depreciation Account Cr.
Particulars Rs. Particulars Rs.
To Machinery A/c 40,000 By Balance c/d 1,00,000
To Balance c/d 2,00,000 By Depreciation A/c (Bal.Fig) 1,40,000
2,40,000 2,40,000

Q. 46. Following was the Balance Sheet of MM. Ltd. as at 31St March, 2023:

BALANCE SHEET as at 31st March, 2023

Particulars Note 31st March 31st March
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITYAND LIABILITIES
1. Share holders Funds
(a) Share Capital 5,00,000 4,00,000
(b) Reserves and Surplus 1 2,00,000 (50,000)
2. Non-Current Liabilities
Long-term Borrowings 2 4,50,000 4,50,000
3. Current Liabilities
(a) Short-term Borrowings 3 1,50,000 1,00,000
(b) Short-term Provisions 4 70,000 90,000
Total 13,70,000 9,90,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
(i) Property, Plant and Equipment 5 10,03,000 7,20,000
(ii) Intangible Assets 6 20,000 30,000
(b) Non-Current Investments 1,00,000 75,000
2. Current Assets
(a) Current Investments 50,000 60,000
(b) Inventories 7 1,07,000 45,000
(c) Cash and Cash Equivalents 90,000 60,000
Total 13,70,000 9,90,000
 Notes to Accounts
Particulars 31st March 31st March
2023 (Rs.) 2022 (Rs.)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit & Loss 2,00,000 (50,000)
2,00,000 (50,000)
2. Long-term Borrowings
12% Debentures 4,50,000 4,50,000
4,50,000 4,50,000
3. Short-term Borrowings
Current Maturities of Long-term Debts (12% Debentures) …. 50,000
Bank Overdraft 1,50,000 50,000
1,50,000 1,00,000
4. Short-term Provisions
Provision for Tax 70,000 90,000
70,000 90,000
5. Property, Plant and Equipment
Machinery 12,03,000 8,21,000
Less: Accumulated Depreciation (2,00,000) (1,01,000)
10,03,000 7,20,000
6. Intangible Assets
Goodwill 20,000 30,000
20,000 30,000
7. Inventories
Stock-in-Trade 1,07,000 45,000
1,07,000 45,000

Additional Information:
(i) 12% Debentures were redeemed on 31St March, 2023.
(ii) Tax Rs.70,000 was paid during the year.
Prepare Cash Flow Statement.

[Ans.: Cash Flow from Operating Activities = Rs.3,37,000;

Cash Used in Investing Activities = Rs.4,07,00
Cash Flow from Financing Activities = Rs.90,000;
Net Increase in Cash and Cash Equivalents = Rs.20,000].
Q 47. From the following Balance Sheet of Gopal Ltd. and the additional information as at 31st
March, 2010 prepare a Cash Flow Statement when Cash Flow from Financing Activities is
Rs.2,32,000:
Particulars Note 31st March 31st March
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITYAND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 10,00,000 80,00,000
(b) Reserves and Surplus 1 4,00,000 (1,00,000)
2. Non-Current Liabilities
Long-term Borrowings 2 90,00,000 90,00,000
3. Current Liabilities
(a) Short-term Borrowings 3 2,40,000 1,00,000
(b) Short-term Provisions 4 2,00,000 1,75,000
Total 27,40,000 18,75,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
(i) Property, Plant and Equipment 5 20,00,000 14,42,000
(ii) Intangible Assets 6 46,000 58,000
(b) Non-Current Investments 1,00,000 45,000
2. Current Assets
(a) Current Investments 2,00,000 1,20,000
(b) Inventories 7 2,14,000 90,000
(c) Cash and Cash Equivalents 1,80,000 1,20,000
Total 27,40,000 18,75,000

Notes to Accounts
Particulars 31st March 31st March
2019 (Rs.) 2018 (Rs.)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit & Loss 4,00,000 (1,00,000)
2. Long-term Borrowings
12% Debentures 9,00,000 9,00,000
3. Short-term Borrowings
Bank Overdraft 2,40,000 1,00,000
4. Short-term Provisions
Provision for Tax 2,00,000 1,75,000
 5. Property, Plant and Equipment
Machinery 24,00,000 16,42,000
Less: Accumulated Depreciation (4,00,000) (2,00,000)
20,00,000 14,42,000
6. Intangible Assets
Goodwill 46,000 58,000
7. Inventories
Stock-in-Trade 2,14,000 90,000

Additional Information: Tax Rs.1,50,000 was paid during the year. (CBSE 2020, Modified)

[Ans.: Cash Flow from Operating Activities = Rs.7,2 1,000; Cash Used in Investing Activities =
Rs.8,13,000; Cash Flow from Financing Activities = Rs.2,32,000; Net Increase in Cash and Cash
Equivalents = Rs.1,40,000.]

Q 48. From the following Balance Sheet of JY Ltd. as at 31St March 2017, prepare Cash Flow
Statement:
BALANCE SHEET as at 31st March, 2017

Particulars Note 31st March 31st March

No. 2017 (Rs.) 2016 (Rs.)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 5,00,000 5,00,000
(b) Reserves and Surplus 1 1,00,000 (25,000)
2. Non-Current Liabilities
Long-term Borrowings 2 2,50,000 1,50,000
3. Current Liabilities
(a) Short-term Borrowings 3 1,50,000 1,00,000
(b) Short-term Provisions 4 1,25,000 75,000
Total 11,25,000 8,00,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment and Intangible
Assets: 5 6,00,000 4,50,000
—Property, Plant and Equipment
2. Current Assets
(a) Trade Receivables 2,75,000 2,25,000
(b) Cash and Cash Equivalents 50,000 25,000
(c) Short-term Loans and Advances 2,00,000 1,00,000
Total 11,25,000 8,00,000
Note to Accounts
Particulars 31st March, 31st March,
2017 (Rs.) 2016 (Rs.)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit & Loss 1,00,000 (25,000)
1,00,000 (25,000)
2. Long-term Borrowings
10% Debentures 2,50,000 1,50,000
2,50,000 1,50,000
3. Short-term Borrowings
Bank Overdraft 1,50,000 1,00,000
1,50,000 1,00,000
4. Short-term Provisions
Provision for Tax 1,25,000 75,000
1,25,000 75,000
5. Property, Plant and Equipment
Machinery 7,37,500 5,25,000
Accumulated Depreciation (1,37,500) (75,000)
6,00,000 4,50,000

Note: Proposed Dividend for the years ended 31st March, 2016 and 2017 are Rs.50,000 and
Rs.75,000 respectively. Additional Information: Rs.1,00,000, 10% Debentures were issued on
31st March, 2017.

[Ans.: Cash Flow from Operating Activities = Rs.2,52,500; Cash Used in Investing Activities =
Rs.3,12,500; Cash Flow from Financing Activities = Rs.85,000; Net Increase in Cash and Cash
Equivalents = Rs.25,000.]
Q 49. From the following Balance Sheet of Mishi Ltd.asat 31st March, 2023, prepare Cash Flow
Statement:
Particulars Note 31st March 31st March
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 16,00,000 12,00,000
(b) Reserves and Surplus 1 6,60,000 4,40,000
2. Non-Current Liabilities
Long-term Borrowings (10% Debentures) 3,20,000 2,00,000
3. Current Liabilities
(a) Short-term Borrowings (Bank Loan) 80,000 1,10,000
(b) Trade Payables 1,50,000 1,80,000
Total 28,10,000 21,30,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
—Property, Plant and Equipment 2 19,00,000 12,10,000
(b) Non-Current Investments 2,70,000 2,00,000
2. Current Assets
(a) Current Investments 1,60,000 80,000
(b) Trade Receivables 1,80,000 4,00,000
(c) Cash and Cash Equivalents 3 3,00,000 2,40,000
Total 28,10,000 21,30,000
Note to Accounts
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
1. Reserves and Surplus
Securities Premium 20,000 ….
General Reserve 3,00,000 2,40,000
Surplus, i.e., Balance n Statement of Profit & Loss 3,40,000 2,00,000
6,60,000 4,40,000
2. Property, Plant and Equipment
Machinery (Cost) 21,40,000 14,00,000
Less: Accumulated Depreciation 2,40,000 1,90,000
19,00,000 12,10,000
3. Cash and Cash Equivalents
1,40,000 1,10,000
Cash in Hand
1,60,000 1,30,000
Bank Balance
3,00,000 2,40,000
Additional In formation:
i. During the year, Machinery costing Rs.1,40,000 (accumulated depreciation
provided thereon Rs.1,10,000) was sold for Rs.20,000.
ii. During the year, Non-current Investments costing Rs.80,000 were sold at a profit
of Rs.16,000.
iii. Debentures were issued on 31st March, 2023.

[Ans.: Cash Flow from Operating Activities = Rs.5,64,000; Cash Used in Investing Activities =
Rs.9,14,000; Cash Flow from Financing Activities = Rs.4,90,000; Net Increase in Cash and Cash
Equivalents Rs.1,40,000.]

[Hint: Net Profit before Tax and Extraordinary Items: Rs.2,00,000.]

Q 50. Following is the Balance Sheet of Sonal Ltd.:

BALANCE SHEET OF SONAL LTD. as at 31st March, 2023

Particulars Note 31st March 31st March
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITY AND LIABILITIES
1. Share holders Funds
(a) Share Capital 1 6,00,000 5,50,000
(b) Reserves and Surplus 2 1,28,000 70,000
2. Current Liabilities
(a) Trade Payables 1,22,000 88,000
(b) Short-term Provisions 3 50,000 40,000
Total 9,00,000 7,48,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment and Intangible
Assets:
(i) Property, Plant and Equipment 3,70,000 2,80,000
(ii) Intangible Assets(Goodwill) 90,000 1,15,000
2. Current Assets
(a) Current Investments 10,000 15,000
(b) Inventories 1,82,000 1,00,000
(c) Trade Receivables 1,57,000 1,57,000
(d) Cash and Cash Equivalents 91,000 81,000
Total 9,00,000 7,48,000
Note to Accounts
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
1. Share Capital
Equity Share Capital 5,00,000 4,00,000
10% Preference Share Capital 1,00,000 1,50,000
6,00,000 5,50,000
2. Reserves and Surplus
Securities Premium 10,000 …..
General Reserve 70,000 40,000
Surplus, i.e., Balance in Statement of Profit & Loss 48,000 30,000
1,28,000 70,000
3. Short-term Provisions
Provision for Tax 50,000 40,000
Additional In formation:
i. Proposed dividend for the years ended 31st March, 2023 and 2022 were Rs.60,000 and
Rs.50,000 respectively.
ii. A machine costing Rs.50,000 (depreciation provided thereon Rs.30,000) was sold for
Rs.10,000.
iii. Depreciation charged during the year was Rs.20,000.
iv. Interim dividend paid Rs.20,000.
v. Income Tax paid Rs.35,000.

Prepare a Cash Flow Statement for the year ended 31st March, 2023, complying with AS-3
(Revised).
[Ans.: Cash Flow from Operating Activities Rs.1,35,000;
Cash Used in Investing Activities = Rs.1,20,000;
Cash Used in Financing Activities = Rs.10,000;
Net Increase in Cash and Cash Equivalents = Rs.5,000.]
[Hints
1. Proposed dividend includes the dividend on both equity and preference shares.
2. Current Investment is a part of Cash Equivalents.]
Q 51. From the following details relating to Grow More Ltd., prepare Cash Flow Statement:

BALANCE SHEET OF GROW MORE LTD. as at 3lst March, 2023

Particulars Note 31st March 31st March

No. 2023 (Rs.) 2022 (Rs.)
I. EQUITYAND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 1 20,00,000 16,00,000
(b) Reserves and Surplus 2 6,00,000 4,20,000
2. Non-Current Liabilities
Long-term Borrowings: 10% Debentures 4,00,000 …..
3. Current Liabilities
(a) Trade Payables 14,00,000 16,40,000
(b) Short-term Provisions 3 2,00,000 1,40,000
Total 46,00,000 38,00,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
—Property, Plant and Equipment 4 26,00,000 18,00,000
(b) Non-Current Investments 2,00,000 ….
2. Current Assets
(a) Inventories 8,00,000 4,00,000
(b) Trade Receivables 10,00,000 14,00,000
(c) Cash and Cash Equivalents …. 2,00,000
Total 46,00,000 38,00,000

Note to Accounts
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
1. Share Capital
Issued, Subscribed and Paid-up:
Equity Shares of 100 each fully paid 20,00,000 16,00,000

2. Reserves and Surplus

General Reserve 4,0,000 3,00,000
Surplus, i.e., Balance in Statement of Profit & Loss 2,00,000 1,20,000
6,00,000 4,20,000
3. Short-term Provisions
Provision for Tax 2,00,000 1,40,000
 4. Property, Plant and Equipment
Plant and Machinery 14,00,000 10,00,000
Land and Building 12,00,000 8,00,000
26,00,000 18,00,000

Additional In formation:
i. Depreciation @ 25% was charged on the opening value of Plant and Machinery.
ii. During the year one old machine costing Rs.1,00,000 (Written Down Value Rs.40,000)
was sold for Rs.70,000.
iii. Rs.1,00,000 was paid as income tax during the year.
iv. Proposed dividend for the year ended 31st March, 2023 was Rs.4,00,000 and for the
year ended 31st March, 2022 was Rs.2,00,000.
v. During the current year new debentures were issued on 1st October, 2022.

[Ans.: Cash Flow from Operating Activities = Rs.4,40,000;

Cash Used in Investing Activities = Rs.12,20,000;
Cash Flow from Financing Activities = Rs.5,80,000;
Net Decrease in Cash and Cash Equivalents = Rs.2,00,000.]

Q 52. Following is the summarised Balance Sheet of Philips India Ltd. as at 31st March, 2023:

Particulars Note 31st March 31st March

No. 2023 (Rs.) 2022 (Rs.)
I. EQUITYANDUArnL1TS
1. Shareholders’ Funds
(a) Share Capital 13,50,000 13,50,000
(b) Reserves and Surplus 1 11,34,000 10,68,000
2. Non-Current Liabilities
Long-term Borrowing:10% Mortgage Loan 8,10,000 …..
3. Current Liabilities
(a) Trade Payables (Creditors) 4,02,000 5,04,000
(b) Short-term Provisions:
Provision for Tax 30,000 2,25,000
Total 37,26,000 31,47,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
—Property, Plant and Equipment 9,60,000 12,00,000
 (b) Non-Current Investments 1,80,000 1,50,000
2. Current Assets
(a) Current Investments 21,000 17,000
(b) Inventories 6,30,000 7,20,000
(c) Trade Receivables 13,65,000 6,30,000
(d) Cash and Cash Equivalents:
Bank 5,70,000 4,30,000
Total 37,26,000 31,47,000

Note to Accounts
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
1. Reserves and Surplus
General Reserve 9,30,000 9,00,000
Surplus, i.e., Balance in Statement of Profit & Loss 2,04,000 1,68,000
11,34,000 10,68,000

Additional In formation:
1. Investments costing Rs.24,000 were sold during the year for Rs.25,500.
2. Provision for Tax made during the year was Rs.27,000.
3. During the year, a part of the Fixed Assets costing Rs.30,000 was sold for
Rs.36,000. The profits were included in the Statement of Profit & Loss.
4. The Interim Dividend paid during the year amounted to Rs.1,20,000.
You are required to prepare Cash Flow Statement.

[Ans.: Cash Used in Operating Activities = Rs.5,53,500; Cash Flow from Investing Activities =
Rs.7,500; Cash Flow from Financing Activities = Rs.6,90,000; Net Increase in Cash and Cash
Equivalents = Rs.1,44,000.]
Q 53. Following is the Balance Sheet of Akash Ltd. as at 31st March, 2023, prepare Cash Flow
Statement:

Particulars Note 31st March 31st March

No. 2023 (Rs.) 2022 (Rs.)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 30,00,000 20,00,000
(b) Reserves and Surplus 1 (4,25,000) (5,37,500)
2. Non-Current Liabilities
Long-term Borrowings 2 7,50,000 6,25,000
3. Current Liabilities
Trade Payables 4,75,000 6,75,000
Total 38,00,000 27,62,500
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets:
—Property, Plant and Equipment (Machinery) 17,25,000 12,50,000
(b) Non-Current Investments 3,00,000 5,00,000
2. Current Assets
(a) Inventories 10,00,000 7,50,000
(b) Trade Receivables 6,00,000 1,12,5000
(c) Cash and Cash Equivalents 1,75,000 1,50,000
Total 38,00,000 27,62,500

Note to Accounts
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit& Loss (4,25,000) (5,37,500)
2. Long-term Borrowings
12% Debentures 7,50,000 6,25,000

Additional Information:
(i) Debentures were issued on 1st January, 2023.
(ii) Machinery costing Rs.5,00,000 on which depreciation charged was Rs.1,75,000
was sold for Rs.3,75,000.
(iii) Depreciation charged during the year amounted to Rs.2,00,000.
(iv) Non-current Investments were sold at a profit of 20%.
Prepare Cash Flow Statement.
[Ans.: Cash Used in Operating Activities = Rs.6,36,250; Cash Used in Investing Activities
Rs.3,85,000; Cash Flow from Financing Activities = Rs.10,46,250.]

Q 54. From the following Balance Sheet of Samta Ltd., as at 31st March, 2023, prepare Cash
Flow Statement:

Particulars Note 31st March 31st March

No. 2023 (Rs.) 2022 (Rs.)
I. EQUITY AND LIABILITIES
1. Shareholders Funds
(a) Share Capital 1 7,50,000 7,50,000
(b) Reserves and Surplus 2 3,05,000 (20,000)
2. Non-Current Liabilities
Long-term Borrowings (8% Debentures) 2,60,000 1,50,000
3. Current Liabilities
(a) Short-term Borrowings (8°o Bank Loan) 40,000 50,000
(b) Trade Payables 1,20,000 1,10,000
(c) Short-term Provisions 3 50,000 40,000
Total 15,25,000 10,80,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and Intangible
Assets:
(i) Property, Plant and Equipment 8,60,000 6,20,000
(ii) Intangible Assets (Goodwill) 15,000 40,000
(b) Non-Current Investments 1,25,000 80,000
2. Current Assets
(a) Current Investments 5000 15,000
(b) Inventories 1,95,000 1,00,000
(c) Trade Receivables 2,00,000 2,00,000
(d) Cash and Cash Equivalents 1,25,000 25,000
Total 15,25,000 10,80,000
 Note to Accounts
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
1. Share Capital
Equity Share Capital 5,50,000 4,50,000
10% Preference Share Capital 2,00,000 3,00,000
7,50,000 7,50,000
2. Reserves and Surplus
Securities Premium: 10,000
Less: Premium on Redemption of
Preference Shares written off 5,000 5,000 ….
General Reserve 1,50,000 1,20,000
Surplus, i.e., Balance in Statement of Profit & Loss 1,50,000 (1,40,000)
3,05,000 (20,000)
3. Short-term Provisions
Provision for Tax 50,000 40,000

Additional In formation:
(i) During the year a piece of machinery costing Rs.60,000 on which depreciation
charged was Rs.20,000 was sold at 50% of its book value. Depreciation provided
on tangible Assets Rs.60,000.
(ii) Income tax Rs.45,000 was provided.
(iii) Additional Debentures were issued at par on 1st October, 2022 and Bank Loan
was repaid on the same date.
(iv) At the end of the year Preference Shares were redeemed at a premium of 5%.

[Ans.: Net Cash Flow from Operating Activities = Rs.3,70,000;

Net Cash Used in Investing Activities = Rs.3,65,000;
Net Cash Flow from Financing Activities = Rs.85,000:
Net Increase in Cash and Cash Equivalents = Rs.90,000.]
Q 55. From the following Balance Sheet and information of Sun Ltd., prepare Cash Flow
Statement:
Particulars Note 31st March 31st March
No. 2023 (Rs.) 2022 (Rs.)
I. EQUITY AND LIABIUTIES
1. Share holders Funds
(a) Share Capital 1 7,00,000 6,00,000
(b) Reserves and Surplus 2 4,10,000 2,00,000
2. Non-Current Liabilities
Long-term Borrowings: 10% Debentures 3,00,000 2,00,000
3. Current Liabilities
Trade Payables 1,40,000 60,000
Total 15,50,000 10,60,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and
Intangible Assets: 7,00,000 6,00,000
—Property, Plant and Equipment 2,00,000 1,00,000
(b) Non-current Investments (10% Investments)
2. Current Assets
(a) Current Investments 9,000 50,000
(b) Inventories 3 2,00,000 1,00,000
(c) Trade Receivables 2,80,000 1,90,000
(d) Cash and Cash Equivalents 80,000 20,000
Total 15,50,000 10,60,000

Note to Accounts
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
1. Share Capital
Equity Share Capital 5,00,000 3,00,000
10% Preference Share Capital 2,00,000 3,00,000
7,00,000 6,00,000
2. Reserves and Surplus
Securities Premium 10,000 …..
Surplus, i.e., Balance in Statement of Profit & Loss 4,00,000 2,00,000
4,10,000 2,00,000
3. Trade Receivables
Sundry Debtors 3,00,000 2,00,000
Less: Provision for Doubtful Debts 20,000 10,000
2,80,000 1,90,000
You are informed that during the year:
(i) Proposed Dividend: 31st March, 2023 31st March, 2022
Equity Share Capital Nil Nil
Preference Share Capital 10% 10%
(ii) A machine with a book value of Rs.90,000 was sold for Rs.50,000.
(iii) Depreciation charged during the year Rs.60,000.
(iv) Debentures were issued on 1st April, 2022.
(v) Investments were purchased on 31st March, 2023.
(vi) Preference shares were redeemed on 31st December, 2022.
(vii) An interim dividend @ 15% was paid on equity shares on 31st December, 2022.
(viii) Fresh equity shares were issued at a premium of 5% on 31st March, 2023.

[Ans.: Cash Flow from Operating Activities = Rs.2,85,000;

Cash Used in Investing Activities = Rs.2,90,000
Cash Flow from Financing Activities = Rs.1,05,000;
Net Increase in Cash and Cash Equivalents Rs.1,00,000.

[Hint: Cash and Cash Equivalents = Cash and Cash Equivalents + Current Investments.]
Q 56. Read the following hypothetical text and answer the given questions on its basis. Profit
for the year ended 31st March, 2023 of iPay (a payment processing start up) was
Rs.15,00,000 after accounting the following:
Particulars Rs.
Depreciation 1,00,000
Loss of Furniture due to Fire 10,000
Interest on Investment (Long-term) 25,000
Tax Refund 10,000
Additional Information:
Particulars 31st March, 31st March,
2023 (Rs.) 2022 (Rs.)
Share Capital 20,00,000 15,00,000
Securities Premium 15,00,000 20,00,000
General Reserve 2,50,000 2,50,000
Machinery 5,00,000 3,00,000
Furniture 80,000 1,00,000
Marketable Securities 1,00,000 ….
10% Non-current Investment 3,00,000 2,00,000
Patents 50,000 80,000
Cash in-Hand and at Bank 50,000 1,00,000
Bank Overdraft 5,00,000 7,00,000
Provision for Tax 1,00,000 75,000
(i) Patents purchased during the year was Rs. 50,000.
(ii) Proposed Dividend for the year ended 31st March, 2022 and 2023 was
Rs.1,50,000 and Rs.2,00,000 respectively.
(iii) Interim Dividend during the year ended 31st March, 2022 and 2023 was Rs.50,000
and Rs.1,20,000 respectively.
You are required to:
1. Determine Net Profit before Tax and Extraordinary Items.
2. Determine Operating Profit before Working Capital Changes.
3. Determine Cash Flow from Investing Activities.
4. Determine Cash Flow from Financing Activities.
5. Determine Cash and Cash Equivalents.
[Ans.: 1. Net Profit before Tax and Extraordinary Items = Rs.18,70,000;
2. Operating Profit before Working Capital Changes = Rs.20,25,000;
3. Cash Used in Investing Activities = Rs.3,25,000;
4. Cash Flow from Financing Activities = Rs.30,000;
5. Cash and Cash Equivalents = Rs.1,50,000.]
 CBSE Sample Paper 2023-24

Q 29 Statement I:- Sale of Marketable Securities will result in no flow of Cash.

Statement II:- Debentures issued as collateral security will result in inflow of cash.

A. Both Statements are correct.

B. Both Statements are incorrect.
C. Statement I is correct and Statement II is incorrect.
D. Statement I is incorrect and Statement II is correct.

OR

What will be the effect of issue of Bonus shares on Cash Flow Statement?
A. No effect
B. Inflow in Financing Activity
C. Inflow in Operating activity
D. Inflow in Investing Activity

Q30. Aditya Sunrise Ltd. provides you the following information:

Particulars 31.3.2023 31.3.2022
10% Bank Loan Nil 1,00,000

Additional Information:
1. Equity Share Capital raised during the year ₹3,00,000;
2. 10% Bank Loan was repaid on 01.04.2022.
3. Dividend received during the year was ₹20,000.
4. Dividend Proposed for the year 2021-22 was ₹50,000 but only ₹20,000 was
approved by the Shareholders.

Find out the cash flow from Financing Activities.

a) ₹ 1,50,000
b) ₹ 2,00,000
c) ₹ 1,70,000
d) ₹ 1,80,000
Q34.Prepare Cash Flow Statement from the following Balance Sheet of Arya Ltd:
Note
Particulars 31.3.2023 31.3.2022
No.
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 10,00,000 8,00,000
(b) Reserves and Surplus 1 6,40,000 5,40,000
2. Non-Current Liabilities
Long-term Borrowings 2 1,50,000 1,00,000
3. Current Liabilities
(a) Trade Payables 30,000 12,000
(b) Short term provisions 3 30,000 28,000
Total 18,50,000 14,80,000
II. ASSETS
1. Non-Current Assets
(a) Property,Plant and equipment
& Intangible Assets :
- Property, Plant & Equipoment 4 7,75,000 4,90,000
(b) Non-current Investments 90,000 50,000
2. Current Assets
(a) Inventories 6,20,000 4,13,000
(b) Trade Receivables 3,20,000 4,94,000
(c) Cash and Cash Equivalents 45,000 33,000
Total 18,50,000 14,80,000
Notes to Accounts

Particulars 31.3.2023 31.3.2022

1. Reserves and Surplus
General Reserve 5,00,000 4,30,000
Capital Reserve 60,000 50,000
Surplus, i.e., Balance in Statement of Profit
and Loss 80,000 60,000

2.Long term borrowings

10 % Debentures 1,50,000 1,00,000

3.Short term provisions

Provision for Tax 30,000 28,000

4. Tangible Assets
Plant and Machinery 7,75,000 4,90,000

Additional Information:
1. Tax provided during the year is ₹17,000.
2. Depreciation charged on plant and Machinery during the year amounted to ₹1,20,000.
3. Non-current Investments costing ₹ 30,000 were sold for ₹ 40,000 during the year. Gain on
sale of Investments was credited to Capital Reserve.
4. Additional Debentures were issued on 31.03.2023.
 Important Question ( 1 Marks )

Q1. X Ltd. purchased furniture for Rs 20,00,000 paying 60% by issue of equity
shares of Rs 10 each and the balance by a cheque. This transaction will result in
a) Cash Used in Investing Activities 20,00,000.
b) Cash Generated from Financing Activities 12,00,000.
c) Increase in Cash and Cash Equivalents 8,00,000.
d) Cash Used in Investing Activities 8,00,000.
Ans : d

Q2. Paid Rs 7,00,000 to acquire shares in K.L. Ltd. and received a dividend of Rs
20,000 after acquisition. These transactions will result in:
a) Cash used in Investing Activities 7,00,000.
b) Cash generated from Financing Activities 7,20,000.
c) Cash generated from Financing Activities 6,80,000.
d) Cash used in Investing Activities 6,80,000
Ans : d

Q3.A company issued 20,000; 9% Debentures of ₹ 100 each at 10% Discount.

These debentures were to be redeemed at 15% Premium at the end of 5 years.
The balance in Securities Premium Account as on the date of Issue was ₹ 3,70,000.
How this transaction will be reflected in Cash Flow Statement?

a) Added 1,30,000 under Operating Activities as Loss on Issue of Debentures

written off and Inflow of 20,00,000 under Financing Activities.
b) Added 5,00,000 under Operating Activities as Loss on Issue of Debentures
written off and Inflow of 18,00,000 under Financing Activities.
c) Added 1,30,000 under Operating Activities as Loss on Issue of Debentures
written off and Inflow of 18,00,000 under Financing Activities.
d) Added 5,00,000 under Operating Activities as Loss on Issue of Debentures
written off and Inflow of 20,00,000 under Financing Activities.
Ans : c
Q4. Z Ltd. purchased a building for Rs 50,00,000 from J. Ltd. paying 40% by the
issue of 9% Debentures and the balance by cheque.
The above transaction will result in:
a) Cash used in investing activities 20,00,000.
b) Cash generated from financing activities 20,00,000.
c) Decrease in cash and cash equivalents 20,00,000.
d) Cash used in investing activities ₹ 30,00,000.
Ans : d

Q5. Assertion (A): Purchase of Fixed Assets is classified as Investing Activity in case
of all enterprises.
Reason (R): Payment of Dividend on shares is classified as Financing Activity in case
of all enterprises.
In the context of above two statements, which of the following is correct?
a) Assertion (A) is correct but Reason (R) is wrong.
b) Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the
correct explanation of Assertion (A).
c) Both Assertion (A) and Reason (R) are incorrect.
d) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct
explanation of Assertion (A).
Ans : b

Q6. Bharat Ltd. earned profit of Rs 1,00,000 after charging depreciation of Rs

20,000 on assets and transfer to General Reserve of Rs 30,000. Goodwill amortised
was Rs 7,000 and gain on sale of machinery was Rs 3,000.
Additional Information (Change in the value of Current Assets and Current
Liabilities): At the end of the year, Trade Receivables showed an increase of Rs
3,000; Trade Payables showed increase of Rs 6,000. Prepaid Expenses increased by
Rs 200 and Outstanding Expenses decreased by Rs 2,000. Cash Flow from
Operating Activities will be
a) 1,50,000
b) 1,52,600.
c) 1,54,800.
d) 1,60,200.
Ans : c
Q7. Following is the extract of Balance Sheet of Max Ltd. for the year ended 31st
March, 2023:
Equity and Liabilities 31st March, 31st March,
2023 (Rs) 2022 (Rs )
Surplus, i.e., Balance in Statement of Profit & Loss 11,00,000 5,00,000
Dividend Payable 50,000 40,000

Additional Information:
Proposed Dividend in the years ended 31st March 2022 and 2023 were Rs 7,00,000
and Rs 6,00,000 respectively.
Which of the following options is correct as Net Profit before Tax and
Extraordinary Items?
a) 6,40,000.
b) 8,40,000
c) 11,40,000.
d) 13,00,000
Ans : d

Q8. Assertion (A): Interest received on Calls-in-Arrears by a company is Financing

Activity.
Reason (R): Dividend received by a financial enterprise is an Investing Activity.
In the context of above two statements, which of the following is correct?
a) Both Assertion (A) and Reason (R) are correct.
b) Both Assertion (A) and Reason (R) are incorrect.
c) Assertion (A) is correct but Reason (R) is incorrect.
d) Assertion (A) is incorrect but Reason (R) is correct
Ans : c

Q9. Insurance Claim received by Albert Co. Ltd. of Rs 5,00,000 for Loss of
Machinery due to theft will be recorded in Cash Flow Statement in which of the
following manner?
a) Added under Operating Activities and Subtracted from Operating Activities as
Extraordinary Item.
b) Subtracted under Operating Activities and Added to Operating Activities as
Extraordinary Item.
 c) Added under Operating Activities as Extraordinary Item and Outflow under
Investing Activity also.
d) Subtracted under Operating Activities and as Inflow under Investing Activities
as Extraordinary Item.
Ans : d

Q10. Damage to machinery due to earthquake was compensated by the

Government. It will be shown in the Cash Flow Statement as
a) Extra-ordinary item under Cash Flow from Operating Activities as outflow
b) Extra-ordinary item under Cash Flow from Operating Activities as inflow.
c) Extra-ordinary item under Cash Flow from Investing Activities as outflow.
d) Extra-ordinary item under Cash Flow from Investing Activities as inflow.
Ans : d

Q11.K Ltd., a manufacturing company obtained a loan of Rs 6,00,000, advanced

loan of Rs 1,00,000 and purchased machinery for Rs 5,00,000. Calculate the
amount of Cash Flow from financing and investing activities.
Ans : Cash flow from financing Activity = 6,00,000, Cash used in Investing Activity =
Rs 6,00,000

Q12. On 1st October, 2018, Micro Ltd. issued 20,000, 8% Debentures of 100 each
and paid interest of Rs 80,000 on these debentures on 31st March, 2019. Calculate
the cash flow from financing activities for the period ending 31st March, 2019.
Ans : 19,20,000

Q13. When is interest received considered as financing activity?

Ans. Interest received on Calls-in-Arrears by a company is considered as financing
activity.

Q14. State any two objectives of preparing 'Cash Flow Statement'.

i. To provide information of cash inflow and outflow from Operating/Investing/

Financing Activities.
ii. To determine net change in Cash and Cash Equivalents
Q15. Give one limitation of Cash Flow Statement.
Ans. Cash Flow Statement ignores non-cash transactions howsoever important
they may be.

Q16. Give one advantage of Cash Flow Statement.

Ans. Cash Flow Statement provides information about cash flow separately for
operating, investing and financing activities.

Q17. Give the meaning of 'Cash Equivalents' for the purpose of preparing Cash
Flow Statement.
Ans. Cash Equivalents are short-term, highly liquid investments that are readily
convertible into known amount of cash and which are subject to an insignificant
risk of change in value. Examples of Cash Equivalents - Treasury Bill, Marketable
Securities, etc

Q18. Normally, what should be the maturity period for a short-term investment
from the date of its acquisition to be qualified as Cash Equivalents?
Ans : A maturity period of up to 3 months from the date of the acquisition qualifies
a short-term investment to be Cash Equivalents.

Q19. Under which type of activity will you classify 'Cash advances and loans made
to third party' while preparing Cash Flow Statement?
Ans. Investing Activity.

Q20. Mevo Ltd., a financial enterprise, had advanced a loan of 3,00,000, invested
Rs 6,00,000 in shares of the other companies and purchased machinery for Rs
9,00,000. It received dividend of 70,000 on investment in shares. The company
sold an old machine of the book value of Rs 79,000 at a loss of Rs 10,000. Compute
Cash Flow from Investing Activities.
Ans : Cash Used in Investing Activity = 8,31,000
Q21. Sale of marketable securities at par would result in inflow of cash. State
whether the statement is True or False.
Ans : False. It will lead to no change in Cash and Cash Equivalents. 'Sale of
Marketable Securitie at par' represents movement between items of Cash and
Cash Equivalents.

Q22. An enterprise may hold securities and loans for dealing or trading purposes in
which case they are similar to inventory acquired specifically for resale.' Is the
statement correct? Cash flows from such activities will be classified under which
type of activity while preparing Cash Flow Statement?
Ans. The statement that 'An enterprise may hold securities and loans for dealing or
trading purposes in which case they are similar to inventory acquired specifically
for resale' is correct for financial companies. Cash flows from such activities will be
classified under Operating Activities while preparing Cash Flow Statement.

Q23. Finserve Ltd., is carrying on a Mutual Fund business. It invested 30,00,000 in

shares and 15,00,000 in debentures of various companies during the year. It
received 3,00,000 as dividend and interest. Find out Cash Flow from Investing
Activities.

Ans. Cash Flow from Investing Activities-Nil, Finserve Ltd. is a Financing Co.