Answer sheet
N-RATHI CAREER FORUM
Marks:35 Date: 07/08/23 Test: Adv. Accounts CA INTER Time:1Hr 20Min
(Cash Flow Statement)
Part A: Multiple Choice Questions
1.Extract of Cash flow statement prepared by Z Ltd are as follows:
Cash generated from operation is Rs 5,41,000
Income Tax Paid Rs 1,80,000
Sale of fixed assest Rs 50,000
Voluntary separation payment paid Rs 80,000
Law Compensation suit received is Rs 1,25,000
Cash Flow from Operating activities ?
(a)Rs 4,06,000 (b)Rs 3,56,000 (c)Rs 5,36,000 (d)None
2. Reliance Capital . a finance service company , made a loan of Rs 1 crore during the financial
year 2022-23, it will be classified as ___
(a)Operating Activities (b)Investing Activities (c)Financial Activities (d)Extra-ordinary Activities
3. Cash Flow Statement of BB Ltd shows the following Position:
Cash Inflow From Operating Activities Rs 4,06,000
Cash Inflow From Investing Activities Rs 3,18,000
Cash Inflow From Financing Activities Rs 18,000
Cash & Cash Equivalent at the end was Rs 1,35,000
Cash & Cash Equivalent at the beginning?
(a)Rs 6,07,000 (b)Rs 29,000 (c)Rs 5,71,000 (d)None
4. In the cash flow statement, ‘cash and cash equivalents’ include
(a)Bank balances and Cash balances.
(b)Short-term investments readily convertible into Cash are subject to an insignificant risk of changes
in value.
(c)Both (a) and (b). (d)None
5. Which of the following would be considered a ‘cash-flow item from an “investing" activity’?
(a) Cash outflow to the government for payment of taxes.
(b)Cash outflow to purchase bonds issued by another company.
(c)Cash outflow to shareholders as dividends (d)Cash outflow to make payment to trade payables.
Part B: Descriptive
Q1(a). Prepare Cash Flow from Investing Activities of Creative Furnishings Limited for year ended 31-3-2017.(5M)
Particulars Rs.
Plant acquired by the issue of 8% Debentures 1,56,000
Claim received for loss of plant in fire 49,600
Unsecured loans given to subsidiaries 4,85,000
Interest on loan received from subsidiary companies 82,500
Pre-acquisition dividend received on investment made 62,400
Debenture interest paid 1,16,000
Term loan repaid 4,25,000
Interest received on investment 68,000
(TDS of Rs. 8,200 was deducted on the above interest)
Book value of plant sold (loss incurred Rs. 9,600) 84,000
Sol: Cash Flow Statement from Investing Activities of Creative Furnishings Limited for the year
ended 31- 03-2017
Cash generated from investing activities Rs. Rs.
Interest on loan received 82,500
Pre-acquisition dividend received on investment made 62,400
Unsecured loans given to subsidiaries (4,85,000)
Interest received on investments (gross value) 76,200
TDS deducted on interest (8,200)
Sale of plant 74,400
Cash used in investing activities (before extra-ordinary item) (1,97,700)
Extraordinary claim received for loss of plant 49,600
Net cash used in investing activities (after extra-ordinary item) (1,48,100)
Note:
1. Debenture interest paid and Term Loan repaid are financing activities and therefore not considered
for preparing cash flow from investing activities.
2. Plant acquired by issue of 8% debentures does not amount to cash outflow, hence also not
considered in the above cash flow statement
(b)Prepare cash flow statement of Gama Limited for the year ended 31st March, 2021 in accordance with
AS-3(Revised) from the following cash account summary: (5M)
Cash summary Account
Inflows Rs. ('000) Outflows Rs. ('000)
Opening Balance 945 Payment to suppliers 54,918
Receipts from Customers 74,682 Purchase of Investments 351
Sale of Investments 459 Property, plant and 6,210
(Cost Rs. 4,05,000) equipment Acquired
Issue of Shares 8,100 Wages and salaries 1,863
Sale of Property, Plant and 3,456 Payment of overheads 3,105
equipment Taxation 6,561
Dividends 2,160
Repayment of Bank Overdraft 6,750
Interest paid on Bank 1,350
Overdraft
Closing Balance 4,374
87,642 87,642
Sol: Gama Limited Cash Flow Statement for the Year Ended 31st March 2021
Particulars Amount Amount
(Rs.’000) (Rs.’000)
Cash flow from Operating Activities:
Cash receipts from customers 74,682
Cash payments to suppliers (54,918)
Cash payments for wages & salaries (1,863)
Cash payments of overheads (3,105)
Cash Generated from Operations 14,796
Payment of Taxation (6,561)
Net Cash from Operating Activities 8,235
Cash Flow from Investing Activities:
Proceeds from sale of investments 459
Proceeds from sale of Property, Plant and Equipment 3,456
Purchase of Investments (351)
Purchase of Property, Plant and Equipment (6,210)
Net Cash Used in Investing Activities (2,646)
Cash Flow from Financing Activities:
Proceeds from issue of shares 8,100
Payment of Dividend (2,160)
Repayment of Bank Overdraft (6,750)
Interest paid on Bank Overdraft (1,350)
Net Cash Used in Financing Activities (2,160)
Net Increase in Cash & Cash Equivalent 3,429
Cash and Cash Equivalent in the Beginning of the year 945
Cash and Cash Equivalent in the end of the year 4374
Q2. Prepare Cash Flow Statement of Light Ltd. for the year ended 31st March, 2020, in accordance with
AS 3 (Revised) from the following Summary Cash Account : (10M)
Summary Cash Account
Rs. in '000 Rs. in '000
Balance as on 01.04.2019 315
Receipts from Customers 24,894
Sale of Investments (Cost Rs. 1,35,000) 153
Issue of Shares 2,700
Sale of Fixed Assets 1,152
Payment to Suppliers 18,306 29,214
Purchase of Investments 117
Purchase of Fixed Assets 2,070 ,
Wages & Salaries 621
Selling & Administration Expenses 1,035
Payment of Income Tax 2,187
Payment of Dividends 720
Repayment of Bank Loan 2,250
Interest paid on Bank Loan 450 (27,756)
Balance as on 31.03.2020 1,458
Sol: Light Ltd.
Cash Flow Statement for the year ended 31st March, 2020
Cash flows from operating activities (Rs. ’000) (Rs.’000)
Cash receipts from customers 24,894
Cash payments to suppliers (18,306)
Cash paid to employees (621)
Other cash payments (for Selling & Administrative expenses) (1,035)
Cash generated from operations 4,932
Income taxes paid (2,187)
Net cash from operating activities 2,745
Cash flows from investing activities
Payments for purchase of fixed asset (2,070)
Proceeds from sale of fixed assets 1,152
Purchase of investments (117)
Sale of investments 153
Net cash used in investing activities (882)
Cash flows from financing activities
Proceeds from issuance of share capital 2,700
Bank loan repaid (2,250)
Interest paid on bank loan (450)
Dividend paid (720)
Net cash used in financing activities (720)
Net increase in cash and cash equivalents 1,143
Cash and cash equivalents at beginning of period 315
Cash and cash equivalents at end of period 1,458
Q2, The Balance Sheet of H Ltd. for the year ending 31st March, 2018 and 31st March, 2017 were
summarised as:
2018 () 2017 ( )
Equity share capital 120,000 1,00,000
Reserves:
Profit and Loss Account 9.000 8,000
Current Liabilities:
Trade Payables 8,000 5,000
Income tax payable 3,000 2,000
Declared Dividends # 4,000 2,000
1,44,000 1,17,000
Fixed Assets (at W.D.V)
Building 19,000 20,000
Furniture & Fixture 34,000 22,000
Cars 25,000 16,000
Long Term Investments 32,000 28,000
Current Assets:
Inventory 14,000 8,000
Trade Receivables 8,000 6.000
Cash & Bank 12,000 17,000
1,44,000 1,17,000
The profit & Loss account for the year ended 31st March,2018 Disclosed
Rs
Profit Before Tax 8,000
Income Tax (3,000)
Profit After Tax 5,000
Declared Dividend (4,000)
Retained Profit 1,000
Further Information is available:
1.Depreciation on Building Rs 1,000
2.Depreciation on Furniture & fixture for the year Rs 2,000
3.Depreciation on Cars for the year Rs 5,000
One car was disposed during the year for Rs 3,400 whose written down value was Rs 2,000
4.Purchase Investment for Rs 6,000
5.Sold Investment for Rs 10,000 , these investment cost Rs 2,000
Prepare Cash Flow Statement as per AS3 using Indirect Method (10M)
Sol: Cash Flow Statement for the year ended 31st March, 2018
Rs. Rs.
Cash Flows from operating activities
Net Profit before taxation 8,000
Adjustments for:
Depreciation (1,000 + 2,000 + 5,000) 8,000
Profit on sale of investment (8,000)
Profit on sale of Car (1,400)
Operating profit before working capital changes 6,600
Increase in Trade receivables (2,000)
Increase in Investories (6,000)
Increase in Trade payables 3,000
Cash generated from operation 1,600
Income taxes paid (2,000) (400)
Net cash generated from operating activities (A)
Cash flows from investing activities
Sale of car 3,400
Purchase of car (16,000)
Sale of investment 10,000
Purchase of investment (6,000)
Purchase of Furniture & Fixtures (14,000)
Net cash used in investing activities (B) (22,600)
Cash flows from financing activities
Issue of shares for cash 20,000
Dividends paid (2,000)
Net cash from financing activities (c) 18,000
Net decrease in cash and cash equivalent (A + B + C) (5,000)
Cash and cash equivalents at beginning of period 17,000
Cash and equivalents at end of period 12,000
Working Notes:
1. Computation of Income taxes paid
Rs.
Income tax expense of the year 3,000
Add: income tax liability at the beginning of the year 2,000
5,000
Less: Income tax liability at the end of the year (3,000)
2,000
2. Computation of Fixed assets acquisitions
Furniture & fixtures (Rs.) Car (Rs.)
W.D.V. at 31.3.2018 34,000 25,000
Add back: Depreciation for the year 2,000 5,000
Disposal - 2,000
36,000 32,000
Less: W.D.V. at 31.3.2017 (22,000) (16,000)
Acquisitions during 2016-2018 14,000 16,000
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