Cash flow analysis
Cash: as per accounting standard III the term cash includes cash in hand, demand
deposit with bank and short term highly liquid securities.
Cash flow: it means inflow and outflow of cash and cash equitant. The difference
b/w cash inflow and outflow are known as net cash flow. It can be either net cash
inflow or net cash outflow.
Cash flow statement: it is the statement which shows inflow and outflow of cash for
specified period. Revised accounting standard III has been mandatory for accounting
period commencing on after 1/4/2001.
Classification of cashflow:
1. Cashflow from operating activity:
It is the main activity of business is called as operating activity. It is the main source of
revenue of business for ex: cash received from Sam, cash paid to supplier, payment or
exp like wages, salary etc.
2. Cash flow from investing activity:
For carrying out business smoothly on enterprises acquires long-term assets like
machinery, furniture, building etc. similarly old asset were sold, these activity results
cashflow for ex: cash paid for purchase of assets, investment. Cash received for sale of
fixed assets for dividend, sale of investment etc.
3. Cash flow from financing activity:
The transaction which are undertaken to arrange capital and other source of financing
activity. For ex: cash received from, issue of share, debenture, other debt instrument,
cash paid for redemption of shares or debenture, cash paid for repayment of long-
term loan. Payment of dividend, interest etc.
Format
Cash flow statement [A/C as per as revised] for the ended
Particulars Amount Amount
1.1 Cash flow from operating activity
1. Net profit for the year xxx
Adjustment for non-cash &non-operating items
(+) transfer to reserve, preliminary expenses written off,
Proposed dividend, depreciation, goodwill written off, provision
For tax, loss on sales of fixed asset and investment, debentures xxx
and Bank interest paid
(-) Interest income, dividend income, profit on sale of fixed asset
And investment (xxx)
Operating cash profit before adjusting charge working capital xxx
Adjustment for charges in working capital
(+) Increase in current liability
Decrease in current asset
(-) decrease in current liability
Increase in current asset (xxx)
Cash flow used in operating activity before tax xxx
(-) Tax paid xxx
Cash flow from or used in operating activity before xxx
extraordinary item
Extraordinary item xxx
Cash flow from or used in operating activity
xxx xxx
1.2 Cash flow from Investing Activity
1. Sale Proceeds of fixed asset or investment Xxx
2. Receipts of dividend & interest Xxx
3. Purchase fixed asset or investment (xxx)
Cash flow from or used in investing activity Xxx
1.3 Cash flow from Financing Activity
1. Fresh issue of shares or debenture for cash Xxx
2. Long term loan borrowed Xxx
3. Redemption of preference share or debenture for cash (xxx)
4. Repayment of loan or payment of dividend & interest (xxx)
Cash flow or used in financing activity xxx
Net increase/ decrease in cash xxx
Add: Opening balance of cash and cash equitant xxx
Closing balance of cash & cash equitant xxx
1. Anup ltd made a profit of Rs.185000, after considering following
Depreciation on fixed asset Rs.5000
Profit on sale of building Rs.10000
Loss on sale of machinery Rs.4000
Taxation provision Rs.30000
Transfer to reserve Rs.10000
Amortization of fictitious asset Rs.2000
The other details
Particular 31/3/2022 31/3/2023
Debtors 18000 17000
creditors 12000 9000
Bills payable 3000 4000
Bills receivable 7000 4000
bank 1000 1500
stock 3000 3000
Calculate operating cash profit and cash flow from operation.
2. H ltd made a profit of Rs.1750000 for the year ending 31/3/20
Depreciation on building Rs.130000
Depreciation on plant and machinery Rs.40000
Goodwill written off Rs.25000
Loss on sale of machinery Rs.9000
Following was the position of current assets and current liability
particular 2019 2020
Stock 70000 87000
Bills receivable 67000 58000
Cash 60000 75000
Creditor 68000 77000
Outstanding salary 7000 4000
A/c payable 43000 29000
Calculate cash flow from operating activity.
3. From the following information calculate cash flow from operation
Particular Rs. Rs.
Stock 49500 38500
Debtors 93500 82500
Bills payable 27500 33000
Creditors 60500 41250
Rent o/s 16500 5500
Insurance prepaid 5500 8250
Cash & bank 30000 55000
Provision for bad debt Rs.8250
Transfer to reserve Rs.60500
Depreciation on building Rs.16500
Provision for tax Rs.154000
Depreciation on plant Rs.5500
Profit on sale of plant Rs.16500
Loss on sale of building Rs.33000
Preliminary expenses written off Rs.16500
Debenture interest paid Rs.8000
Proposed dividend Rs.5000
Net profit for the year Rs.1000000
Calculation of cash flow from operation
4. Compute cash flow operations from the following
Particular 2021 2022
Sundry creditors 9000 13500
Bills payable 7200 3600
o/s expenses 5400 9000
Stock 18000 21600
Sundry debtors 27000 36000
Bills receivable 9000 14400
Prepaid expenses 1800 900
Profit and loss a/c 12500 28000
Depreciation on fixed assets Rs.2000
Loss on sale of machinery Rs.1000
Dividend received on investment Rs.450
Preliminary expenses written off Rs.1250
Goodwill written off Rs.1000
Transfer to reserve Rs.5000
Proposed dividend Rs.10000
Profit on sale of building Rs.4000
Provision for tax Rs.5000
Tax paid Rs.2000
Compensation received from insurance company Rs.10000
5. The following information is available from the book of g ltd
Particular 2020 2021
Profit made during the year - 500000
Income received in advance 1200 1000
Prepaid expenses 2800 3200
debtors 190000 160000
Bills receivable 40000 50000
creditors 80000 90000
Bills payable 30000 26000
Accrued income 2400 3000
Outstanding expenses 4000 5000
Cash at bank 4000 5000
Short term investment 5000 6000
furniture 10000 15000
Calculate cash flow from operation
6. Calculate cash flow from operation
Depreciation on fixed asset 5000
Loss on sale of machinery 4000
Profit on sale of machinery 10000
Proposed dividend 3000
Depreciation of fictitious asset 2000
Tax paid 3000
Interest paid 4000
Salary paid 10000
Other details
Particulars 2019 2020
Debtors 18000 15000
Creditors 12000 8000
Bills receivables 8000 10000
Bills Payables 6000 8000
Outstanding Expense 3000 2000
Profit for the year - 156000
Cash at bank 2000 3000
7. from the following Balance sheet of B. ltd. Prepare cash flow statement.
Liability 2021 2022 Asset 2021 2022
Equity share capital 150000 200000 Goodwill 57500 45000
Redeemable preference share 75000 50000 Building 100000 85000
General Reserve 20000 35000 Plant 40000 100000
Profit and Loss account 15000 24000 Bills Receivables 10000 15000
Proposed dividend 21000 25000 Cash in hand 7500 5000
Creditor 27500 41500 Cash @ bank 5000 4000
Bills Payable 10000 8000 Stock 30000 50000
Provision for Tax 20000 25000 Preliminary Expanses 8500 4500
Debtor 80000 100000
Total 338500 408500 338500 408500
8. Prepare cash flow statement from the following information
Liability 2020 2021 Assets 2020 2021
Share capital 300000 360000 Land and Building 230000 390000
Security Premium Nil 30000 Machinery 85400 14000
General Reserve 45000 65000 Furniture 5500 6500
Profit and Loss A/c 80000 80800 Stock 82400 95700
Debenture Nil 70000 Debtors 75000 85000
creditors 85000 90700 bank 30000 42000
Provision for tax 22500 40500 Cash 54200 2800
Proposed dividend 30000 35000
562500 762000 562500 762000
1. Depreciation on land and building Rs.62000, on Machinery Rs.50000, on Furniture Rs.1200.
9. Prepare cash flow statement and relevant ledger A/c
Liability 2020 2021 Asset 2020 2021
Equity share capital 450000 500000 Goodwill 115000 90000
Profit and Loss A/c 70000 118000 Building 200000 170000
Creditors 97000 133000 Machinery 80000 200000
Bills Payable 20000 16000 Stock 77000 109000
Tax Provision 40000 50000 Bills Receivable 20000 30000
Debtors 160000 200000
Bank 25000 18000
Total 677000 817000 677000 817000
Depreciation Rs.10000 and 20000 on Machinery and Building respectively and interim
dividend Rs.20000 paid during the year
Rs.35000 income tax paid.
10. Following are the Summarized Balance Sheet of Supreme Ltd as on 31/3/2021
Particular 2020 2021
Liability
Share capital 450000 450000
Reserve 300000 310000
Profit and Loss A/c 56000 68000
Mortgage Loan Nil 270000
Taxation Provision 75000 10000
Creditor 168000 134000
1049000 1242000
Asset
Fixed Asset 400000 320000
Long term investment 50000 60000
Stock 240000 210000
Debtors 210000 455000
Cash at bank 149000 197000
1049000 1242000
Investment costing Rs.8500
Provision for tax made Rs.9000
Part of Fixed asset costing Rs.10000 Sold for Rs.12000. The profit was included in Profit and Loss
A/c
Dividend paid during the year Rs.40000
You are required to prepare Statement of sources & uses of cash.
11.The following are summarized balance sheet as on 31/12/2018 and 31/12/2019
Particular 2018 2019
Liability
Share capital 200000 250000
General reserve 50000 60000
Profit and loss a/c 30500 30600
Mortgage loan 70000 Nil
Sundry creditors 150000 135200
Provision for tax 30000 35000
530500 510800
Asset
Land and building 200000 190000
Machinery 150000 169000
Stock 100000 74000
Sundry debtors 80000 64200
Cash 500 600
Bank Nil 8000
Goodwill Nil 3000
530500 510800
1. During the year 2019 Rs.23000 dividend paid.
2. Asset of another company was purchased for consideration of Rs.50000 Payable in share.
Asset purchased were stock 20000, machinery 25000.
3. Machinery was further purchased for Rs.8000 and depreciation written off on machinery
Rs.12000
4. Income tax provided during the year Rs.33000.
5. loss on sale of machinery Rs.200 written off to general reserve, prepare cash flow statement
and show working note cleanly.
12. Prepare cash flow statement from the following information
Liability
Share capital 800000 400000
General reserve 50000 60000
P/L A/c 30500 30600
Long term loan 70000 Nil
A/c Payable 150000 135200
Provision for tax 30000 35000
630500 660800
Asset
Land and building 300000 330000
Machinery 150000 169000
Goodwill Nill 10000
Stock 100000 74000
A/c receivable 80000 64200
Bank Nill 8000
Cash 500 5600
630500 660800
1. Dividend paid during year Rs.30000
2. Asset of another company purchased for consideration Rs.100000 payable in share. The
asset purchases were stock.
3. Machinery 40000
4. Machinery further purchase for Rs.28000
5. Depreciation on machinery 12000
6. Loss on sale of machinery Rs.100
7. Tax paid 37000
13. Following are the summarized B. Sheet of X ltd for the year ending 31/03/2021
and 2022
Liabilities 2021 2022
Equity share capital 500000 600000
8-1 Preference share capital 300000 250000
15-1 Debenture - 500000
Long term loan 200000 -
Retained earning 50000 100000
General reserve 70000 100000
Creditors 50000 70000
B/P 20000 10000
O/s expense 5000 6000
Provision for tax 25000 18000
Proposed dividend 30000 40000
125000 1694000
Asset
Land and building 200000 300000
Machinery 100000 150000
Furniture 80000 100000
Stock 300000 400000
Debtors 100000 80000
Investment 150000 100000
Prepaid expenses 5000 10000
Preliminary expenses 10000 6000
Goodwill 8000 4000
Cash 200000 500000
Bank 97000 44000
1250000 1694000
1. Provision for tax during the year Rs.8000
2. Dividend paid Rs.10000
3. Depreciation on machinery Rs.10000 and land and building Rs.20000
4. Part of furniture costing Rs.10000. sold for Rs.8000
5. Part of investment sold for Rs.20000 @ a profit of 5000
6. Interim dividend paid Rs.5000
14. Prepares cash flow statement form the following information.
particular 2013 2014
liabilities
Share capital 6000000 6000000
General reserve 3090000 3410000
Profit and loss a/c 150000 130000
Debentures - 1500000
Creditors 310000 370000
9550000 11410000
Asset
Land and building 142000 175000
Machinery (-dep) 3100000 3750000
Furniture (-dep) 840000 980000
Investment 50000 60000
Stock 3340000 4020000
Bank 800000 850000
cash 1278000 1575000
9550000 11410000
1. Dividend of Rs.180000 for the year ended 2013 was paid during 2014
2. Investment costing Rs.10000 sold for Rs.12000
3. Depreciation on asset for the year ending 2014 charged to P/L a/c, land and building
4200, Machinery 474000, Furniture 184000.
4. Sale of machinery – sales value 100000 (bank value 220000)
5. Sale of furniture sales value 30000 ( bank value 20000)
Prepare cash flow statement with relevant ledger A/c
15. Prepare cash flow statement from the following B sheet
Liability 2020 2021
Share capital 1700000 1835000
Reserve 40000 83700
Profit and loss a/c 100000 130000
Creditors 114000 108000
Loan on mortgage 10000 70000
Bank overdraft 8000 18000
Provision for dividend 70000 50000
2042000 2494700
Asset
Building 800000 1000000
Plant and machinery 250000 370000
Fixtures and fitting 5000 6000
Cash 20000 2200
Debtors 480000 343700
Prepaid exp 3000 3100
Investment 164000 170000
Goodwill 300000 388700
Preliminary exp 10000 2000
B/R 10000 9000
2042000 2294700
1. Depreciation is charged 3% of cost of building. 900000, on Plant and machinery @8%
of cost of Rs.400000, Fixture and fitting @5% of cost of 8000.
2. Investment was purchased and Interest received Rs3000 was used in writing down
the book value of investment.
3. The declared dividend 2020 was pound and interim dividend was Rs.20000 paid out
of p/l a/c.
