GR 12 ACCOUNTANCY 2020-21

CASH FLOW STATEMENT

REVISION QUESTIONS

1. Following is the Balance Sheet of Mevanca Limited as at 31st March, 2017:

Mevanca Limited BALANCE SHEET

as at 31st March, 2017:

31st March, 31st March,

Particulars Note 2017 2016
No.
(₹) (₹)

I. EQUITY AND LIABILITIES

1. Shareholders' 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

Fixed Assets 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

31st 31st
March, March,
Particulars 2017 2016

(₹) (₹)

1. Reserves and Surplus

Surplus, i.e., Balance in Statement of Profit and Loss 25,000 1,20,000

25,000 1,20,000

2. Long-term Borrowings

10% Long-term Loan 80,000 60,000

80,000 60,000

3. Short-term Provisions

Provision for Tax 68,000 70,000

68,000 70,000

4. Fixed Assets

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 ₹ 53,000 was paid during the year.
Prepare Cash Flow Statement.
ANSWER:
Cash flow Statement
for the year ended 31st March, 2017
Amount Amount
Particulars
(₹) (₹)
A. Cash Flow from Operating Activities
Net Loss as per Statement of Profit and Loss (95,000)
Add: Provision for Tax made (WN1) 51,000
Net loss before Tax and Extraordinary Items (44,000)
Add: Depreciation charged during the year 25,000
Interest paid on loan (WN2) 7,500
Net Loss before Working Capital Changes (11,500)
Add: Decrease in Trade Receivables 14,000
Decrease in other Current Assets 4,000
Less: Decrease in Trade Payables (14,000)
Increase In Inventories (7,000)
Net Loss before Tax (14,500)
Add: Tax to be paid during the year (53,000)
Cash used in Operating Activities (67,500)
B. Cash Flow from Investing Activities
Purchase of Machinery (1,69,000)

Cash used in Investing Activities (1,69,000)

C. Cash Flow from Financing Activities

Proceeds from Issue of Shares 2,00,000
Proceeds from additional loan taken 20,000
Interest paid on long-term loan (7,500)
Cash flow from Financing Activities 2,12,500
Net decrease in Cash and Cash Equivalents (24,000)
Add: Opening Balance of Cash and Cash Equivalent 49,000
Cash and Cash Equivalents at the end of the year 25,000
 Working Notes:
Dr. Provision for Tax A/c Cr.
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
2017 2016
March 31 To Cash A/c- Tax Paid 53,000 April 01 By balance b/d 70,000
March 31 To balance c/d 68,000
2017
March 31 By Statement of P & L A/c 51,000

1,21,000 1,21,000

2. Following are the Balance Sheets of Krishtec Ltd. for the years ended 31st March 2012 and 2011:

31st 31st
Note March, March,
Particulars
No. 2012 2011
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 12,00,000 8,00,000
(b) Reserves and Surplus (Surplus, i.e., Balance in Statement of 3,50,000 4,00,000
Profit and Loss)
2. Non-Current Liabilities
Long-term Borrowings 4,40,000 3,50,000
3. Current Liabilities
(a) Trade Payables 60,000 50,000
Total 20,50,000 16,00,000
II. ASSETS
1, Non-Current Assets
Fixed Assets:
Tangible Assets 12,00,000 9,00,000
2. Current Assets
(a) Inventories 2,00,000 1,00,000
(b) Trade Receivables 3,10,000 2,30,000
(c) Cash and Cash Equivalents 3,40,000 3,70,000
Total 20,50,000 16,00,000

Prepare a Cash Flow Statement after taking into account the following adjustments:
(a) The company paid Interest ₹36,000 on its long-term borrowings.
(b) Depreciation charged on tangible fixed assets was ₹1,20,000
ANSWER:
 Cash Flow Statement
for the year ended March 31, 2012
Amount Amount
Particulars
(₹) (₹)
A Cash Flow from Operating Activities
Surplus; Profit as per Statement of Profit and Loss (50,000)
Non Cash & Non Operating Items to be Added:
Depreciation 1,20,000
Interest Paid 36,000 1,56,000
Operating Profit before Working Capital Adjustments 1,06,000
Less: Increase in Current Assets
Inventories (1,00,000)
Trade Receivables (80,000)
Add:Increase in CurrentLiabilities
Trade Payables 10,000 (1,70,000)
Cash Generated from Operations (64,000)
Less: Tax Paid NIL
Net Cash used in Operating Activities (64,000)

B Cash Flow from Investing Activities

Purchase of Tangible Fixed Assets (4,20,000)
Net Cash Used in Investing Activities (4,20,000)

C Cash Flow from Financing Activities

Interest Paid (36,000)
Proceeds from Issue of Share Capital 4,00,000
Proceeds from Long Term Borrowings 90,000
Net Cash Flow from Financing Activities 4,54,000
D Net Decrease in Cash and Cash Equivalents (30,000)
Add: Cash and Cash Equivalent in the beginning of the period 3,70,000
Cash and Cash Equivalents at the end of the period 3,40,000

Tangible Fixed Assets Account

Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
Balance b/d 9,00,000 Depreciation A/c 1,20,000
Bank A/c (Bal. Fig.) 4,20,000 Balance c/d 12,00,000
13,20,000 13,20,000
3. From the following Balance Sheet of Kumar Ltd. as at 31st March, 2019, prepare Cash Flow
Statement:

31st 31st
March, March,
Particulars Note No.
2019 2018
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 16,00,000 10,40,000
(b) Reserves and Surplus, 2 5,50,000 2,60,000
2. Non-Current Liabilities
Long-term Borrowings:
9% Debentures 4,00,000 6,00,000
3. Current Liabilities
Trade Payables 4,50,000 1,00,000
Total 30,00,000 20,00,000
II. ASSETS
1. Non-Current Assets
Fixed Assets 20,00,000 15,00,000
2. Current Assets
(a) Inventories 3,00,000 2,00,000
(b) Trade Receivables 2,00,000 1,00,000
(c) Cash and Cash Equivalents 5,00,000 2,00,000
Total 30,00,000 20,00,000

Notes to Accounts
31st 31st
March, March,
Particulars 2019 2018
(₹) (₹)
1. Share Capital
Equity Share Capital 15,00,000 10,00,000
7% Preference Share Capital 1,00,000 40,000
16,00,000 10,40,000
2. Reserves and Surplus
General Reserve 4,00,000 60,000
Surplus, i.e., Balance in Statement of Profit and Loss 1,50,000 2,00,000
5,50,000 2,60,000

Additional Information:
1. During a year, a machinery costing ₹ 20,000 was sold for ₹ 6,000.
2. Dividend paid during the year ₹ 50,000.
ANSWER:
Cash Flow Statement
for the year ended March 31, 2019
Amount Amount
Particulars
(₹) (₹)
A Cash Flow from Operating Activities
Profit as per Statement of Profit and Loss (1,50,000 – 2,00,000) (50,000)
Transfer to General Reserve 3,40,000
Dividend Paid 50,000
Profit Before Taxation 3,40,000
Items to be Added:
Interest Paid 54,000
Loss on Sale of Machinery 14,000
Operating Profit before Working Capital Adjustments 4,08,000
Less: Increase in Current Assets
Inventories (1,00,000)
Trade Receivables (1,00,000)
Add: Increase in Current Liabilities
Trade Payables 3,50,000
Cash Generated from Operations 5,58,000
Less: Tax Paid –
Net Cash Flow from Operating Activities 5,58,000

B Cash Flow from Investing Activities

Sale of Machinery 6,000
Purchase of Fixed Assets (5,20,000)
Net Cash Used in Investing Activities (5,14,000)

C Cash Flow from Financing Activities

Proceeds from Issue of Equity Share Capital 5,00,000
Proceeds from 7% Preference Share Capital 60,000
Dividend Paid (50,000)
Redemption of 9% Debentures (2,00,000)
Interest Paid (6,00,000 × 9%) (54,000)
Net Cash Flow from Financing Activities 2,56,000

D Net Increase in Cash and Cash Equivalents 3,00,000

Add: Cash and Cash Equivalent in the beginning of the period 2,00,000
Cash and Cash Equivalents at the end of the period 5,00,000

Working Notes:
Fixed Assets Account
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
Balance b/d 15,00,000 Bank A/c (Sale) 6,000
Bank A/c (Purchase- Bal. Fig.) 5,20,000 Profit and Loss A/c (Loss on Sale) 14,000
Balance c/d 20,00,000
 20,20,000 20,20,000

4. Following are the Balance Sheets of Solar Power Ltd. as at 31st March, 2014 and 2013:
Solar Power Ltd.
BALANCE SHEET
31st 31st
Note March, March,
Particulars
No. 2014 2013
(₹) (₹)
I. EQUITY AND 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
Fixed Assets:
(i) Tangible Assets 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

31st March, 2014 31st March, 2013

Particulars
(₹) (₹)
1. Revenue and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss 6,00,000 4,00,000
2. Tangible Assets
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 Information:
During the year, a piece of machinery costing ₹48,000 on which accumulated depreciation was ₹
32,000. was sold for ₹ 12,000.
Prepare Cash Flow Statement.

ANSWER: Cash Flow Statement

for the year ended March 31, 2014
Amount Amount
Particulars
(Rs) (Rs)
A Cash Flow from Operating Activities
Profit as per Statement of Profit and Loss 2,00,000
Profit Before Taxation 2,00,000
Items to be Added:
Amortisation of Goodwill 1,44,000
Depreciation 1,32,000
Loss on Sale of Fixed Assets 4,000 2,80,000
Operating Profit before Working Capital 4,80,000
Adjustments
Less: Increase in Current Assets
Inventories 16,000
Trade Receivables 54,000
Less: Decrease in Current Liabilities
Trade Payables 50,000
Short-Term Provisions 54,000 1,74,000
Net Cash Generated from Operating Activities 3,06,000

B Cash Flow from Investing Activities

Sale of Machinery 12,000
Purchase of Machinery (5,88,000)
Net Cash Used in Investing Activities (5,76,000)

C Cash Flow from Financing Activities

Proceeds from Issue of Share Capital 2,00,000
Proceeds from Long Term Borrowings 1,40,000
Net Cash Flow from Financing Activities 3,40,000

D Net Increase or Decrease in Cash and Cash 70,000

Equivalents
Add: Cash and Cash Equivalent in the 10,50,000
beginning of the
period
Cash and Cash Equivalents at the end of the 11,20,000
period
WN
Machinery Account
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
Balance b/d 20,00,000 Bank A/c (Sale) 12,000
Bank A/c (Purchase- Bal. 5,88,000 Depreciation on Part of Machinery 32,000
Fig.)
Profit and Loss A/c (Loss on Sale) 4,000

Balance c/d 25,40,000

25,88,000 25,88,000

Accumulated Depreciation Account

Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
Machinery A/c 32,000 Balance b/d 3,00,000
Balance c/d 4,00,000 Profit and Loss A/c (Dep. charged 1,32,000
during the year- Bal. Fig.)
4,32,000 4,32,000
5.
Net profit before tax and extra ordinary items
Surplus , Closing 3,00,000
Less Opening 2,00,000
1,00,000
Add: Provision for Tax 50,000 1,50,000
Adjustment of non-cash and Non-operating items
Add: Non cash and Non-operating expense
Depreciation 66,000
Goodwill Written Off 72,000
Loss on sale of machinery 2,000 1,40,000
Operating Profit before working capital changes 2,90,000
Add: Decrease in C. Asset and Increase in C. liability
Less: Increase in C. Asset and Decrease in C. liability
Trade Receivables 27,000
Inventories 8,000
Trade Payables 25,000 60,000
Cash generated from operating activity 2,30,000
Less: Tax Paid 77,000
A. Cash flow from operating activity 1,53,000
Cash Flow from investing activity
Sale of machinery 6,000
Purchase of machinery (2,94,000)
B. Cash flow from investing activity (2,88,000)
Cash flow from Financing activity
Proceeds from Issue Shares 1,00,000
Proceeds from long term borrowings 70,000
C. Cash flow from Financing activity 1,70,000
Net Increase in Cash and cash equivalents(A+B+C) 35,000
Add: Opening cash and cash equivalents(3,75,000+1,50,000) 5,25,000
Closing Balance of cash and Cash
Equivalents(3,20,000+2,40,000) 5,60,000

Machinery Account
Particulars Amount Particulars Amount
To balance b/d 10,00,000 By Bank (Sales) 6,000
By Acc. Depreciation 16,000

To Bank (Purchase) 2,94,000 By Loss on Sale of Machinery 2,000

By Balance c/d 12,70,000
12,94,000 12,94,000
Working Notes

Accumulated Depreciation Account

Particulars Amount Particulars Amount
To Machinery 16,000 By balance b/d 150,000
To Balance c/d 2,00,000 By Stt. Of P&L (Depreciation) 66,000
2,16,000 2,16,000