Cash Flow Statement

Classify the following activities into operating activities, investing activities, financing activities, cash equivalents. 1. Purchase of machinery. 2. Proceeds from issue of equity share capital. 3. Cash revenue from operations. 4. Proceeds from long-term borrowings. 5. Proceeds from sale of old machinery. 6. Cash receipt from trade receivables. 7. Trading commission received. 8. Purchase of non-current investment. 9. Redemption of preference shares. 10. Cash purchases. 11. Proceeds from sale of non-current investment. 12. Purchase of goodwill. 13. Cash paid to supplier. 14. Interim dividend paid on equity shares. 15. Employee benefits expenses paid. 16. Proceeds from sale of patents. 17. Interest received on debentures held as investments. 18. Interest paid on long-term borrowings. 19. Office and administrative expenses paid. 20. Manufacturing overheads paid. 21. Dividend received on shares held as investment. 22. Rent received on property held as investment. 23. Selling and distribution expenses paid. 24. Income tax paid. 25. Dividend paid on preferences shares. 26. Under-writing commission paid. 27. Rent paid. 28. Brokerage paid on purchase of non-current investment. 29. Bank overdraft. 30. Cash credit. 31. Short-term deposit. 32. Marketable securities. 33. Refund of income-tax received.

Choose one of the two alternatives given below and fill in the blanks in the following statements: (a) If the net profits earned during the year is Rs. 50,000 and the amount of debtors in the beginning and the end of the year is Rs. 10,000 and Rs. 20,000 respectively, then the cash from operating activities will be equal to Rs. _____ (Rs. 40,000/Rs. 60,000) (b) If the net profits made during the year are Rs. 50,000 and the bills receivables have decreased by Rs. 10,000 during the year then the cash flow from operating activities will be equal to Rs. _____ (40,000/Rs. 60,000) (c) Expenses paid in advance at the end of the year are _____ the profit made during the year (added to/deducted from). (d) An increase in accrued income during the particular year is _____ the net profit (added to/deducted from). (e) Goodwill amortised is _____ the profit made during the year for calculating the cash flow from operating activities (added to/ deducted from). (f) For calculating cash flow from operating activities, provision for doubtful debts is _____ the profit made during the year (added to/ deducted from).

While computing cash from operating activities, indicate whether the following items will be added or subtracted from the net profit- if not to be considered, write NC. Items: Treatment (a) Increase in the value of creditors (b) Increase in the value of patents (c) Decrease in prepaid expenses (d) Decrease in income received in advance (e) Decrease in value of inventory (f) Increase in share capital (g) Increase in the value of trade receivables (h) Increase in the amount of outstanding expenses (i) Conversion of debentures into shares (j) Decrease in the value of trade payables (k) Increase in the value of trade receivables (l) Decrease in the amount of accrued income.

From the following particulars, calculate cash flows from investing activities: Purchased Rs. Sold Rs. Plant 4,40,000 50,000; Investments 1,80,000 1,00,000; Goodwill 2,00,000; Patents 1,00,000. Interest received on debentures held as investment Rs. 60,000. Dividend received on shares held as investment Rs. 10,000. A plot of land had been purchased for investment purposes and was let out for commercial use and rent received Rs. 30,000.

From the following Information, calculate cash flows from investing and financing activities: Particulars 2016 2017; Machine at cost 5,00,000 9,00,000; Accumulated Depreciation 3,00,000 4,50,000; Equity Shares Capital 28,00,000 35,00,000; Bank Loan 12,50,000 7,50,000. In year 2017, machine costing Rs. 2,00,000 was sold at a profit of Rs. 1,50,000, Depreciation charged on machine during the year 2015 amounted to Rs. 2,50,000.

What is a Cash flow statement?

How are the various activities classified (as per AS-3 revised) while preparing cash flow statement?

State the objectives of cash flow statement.

What are the objectives of preparing cash flow statement?

State the meaning of the terms: (i) Cash Equivalents, (ii) Cash flows.

Prepare a format of cash flow from operating activities.

“The nature/type of enterprise can change altogether the category into which a particular activity may be classified.” Do you agree? Illustrate your answer.

Describe the procedure to prepare Cash Flow Statement.

Describe “Indirect” method of ascertaining Cash Flow from operating activities.

Explain the major Cash Inflows and outflows from investing activities.

Explain the major Cash Inflows and outflows from financing activities.

Anand Ltd., arrived at a net income of Rs. 5,00,000 for the year ended March 31, 2017. Depreciation for the year was Rs. 2,00,000. There was a profit of Rs. 50,000 on assets sold which was transferred to Statement of Profit and Loss account. Trade Receivables increased during the year Rs. 40,000 and Trade Payables also increased by Rs. 60,000. Compute the cash flow from operating activities by the indirect approach.

From the information given below you are required to calculate the cash paid for the inventory: Inventory in the beginning Rs. 40,000; Credit Purchases Rs. 1,60,000; Inventory in the end Rs. 38,000; Trade payables in the beginning Rs. 14,000; Trade payables in the end Rs. 14,500.

For each of the following transactions, calculate the resulting cash flow and state the nature of cash flow, viz., operating, investing and financing. (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 Informa Tech. and received a dividend of Rs. 50,000 after acquisition. (c) Sold machinery of original cost Rs. 2,00,000 with an accumulated depreciation of Rs. 1,60,000 for Rs. 60,000.

The following is the Profit and Loss Account of Yamuna Limited: i) Revenue from Operations Rs. 10,00,000; ii) Expenses: Cost of Materials Consumed Rs. 50,000, Purchases of Stock-in-trade Rs. 5,00,000, Other Expenses Rs. 3,00,000; Total Expenses Rs. 8,50,000; iii) Profit before tax Rs. 1,50,000. Additional information: (i) Trade receivables decrease by Rs. 30,000 during the year. (ii) Prepaid expenses increase by Rs. 5,000 during the year. (iii) Trade payables increase by Rs. 15,000 during the year. (iv) Outstanding expenses payable increased by Rs. 3,000 during the year. (v) Other expenses included depreciation of Rs. 25,000. Compute net cash from operations for the year ended March 31, 2017 by the indirect method.