NCERT Solutions for Class 12 Accountancy (Part 2) Chapter 6 Cash Flow Statement

NCERT
SOLUTIONS
CLASS - 12th

aglase .co

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Class : 12th
Subject : Accountancy
Chapter : 6
Chapter Name : Cash flow statement

Q1 What is a Cash Flow Statement?

Answer. A cash flow is a state which shows the inflow and outflow of cash from various
business activities. These activities are majorly divided into three categories - operating,
investing and financing activities. It explains the various purposes for which cash has been paid
or has been received by the business enterprise in one financial year.

Page : 272 , Block Name : Short Answer Questions

Q2 How are the various activities classified (as per AS-3 revised) while preparing cash flow
statement?

Answer. Cash flow is the statement showing the various purposes for which cash has been paid
or received by the business enterprise in one financial year. It is prepared as per the AS-3.
→ Cash Flow from Operating Activities
→ Cash Flow from Investing Activities
→ Cash Flow from Financing Activities

Page : 272 , Block Name : Short Answer Questions

Q3 State the uses of cash flow statement?

Answer. The uses of cash flow statement are as follows:
→ Financial planning - It is useful in planning for the financial resources of the business. It
explains the purposes for which the company has used its funds or has received funds,
which helps in estimating its future expenses or incomes.
→ Maintaining liquidity - The cash flow tells the position of cash in the business and its
inflow and outflow. It thereby helps in maintaining cash liquidity in the business.

Page 1 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Page : 272 , Block Name : Short Answer Questions

Q4 What are the objectives of preparing cash flow statement?

Answer. The important objectives for preparing Cash Flow Statement are as follows:
→ The most important objective that is fulfilled by preparing Cash Flow Statement is to
ascertain the gross inflows and outflows of cash and cash equivalents from various
activities.
→ Secondly, Cash Flow Statement helps in analysing various reasons responsible for
change in the cash balances during an accounting year.
→ This statement helps in analysing and understanding the liquidity and solvency of a
company , thereby, depicting the true liquidity position to the creditors and the investors.
→ Cash Flow Statement also helps in ascertaining the requirement and availability of cash
in near future.

Page : 272 , Block Name : Short Answer Questions

Q5 State the meaning of the terms: Cash Equivalents, Cash flows.

Answer. Cash equivalents are short term, highly liquid investments that are easily convertible
into cash and which are subject to an insignificant risk of change in value. In other words, cash
equivalents are held for the purpose of meeting short term cash commitments rather than for
investment or any other purpose. An investment held for short-term maturity, say three months
can be regarded as cash equivalent. Some examples of cash equivalents are treasury bills,
commercial papers, etc. On the other hand, cash flows are inflows and outflows of cash and
cash equivalents. A cash inflow results in increase in the total cash balance and a cash outflow
results in decrease in the total cash balance.

Page : 272 , Block Name : Short Answer Questions

Q6 Prepare a format of cash flow from operating activities under_*_ and indirect method.
* Preapre Cash Flow from Operating Activities using both the methods i.e. Direct and Indirect
Method.

Answer. The format of cash flow from operating activities is as follows:

Direct Method

Page 2 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Cash Flow from Operating Activities:
Cash receipts from customers ***
Cash paid to suppliers and employers (***)
Cash generated from operations ***
Income tax paid (***)
Cash flow before extraordinary items ***
+/– Extraordinary items ***
Net Cash from operating activities ***

Indirect Method

Cash Flow from Operating Activities:
Net Profit before tax and extraordinary items ***
Ad Non-Cash Expenses and Non-Operating Expenses
d:
Depreciation **
Goodwill **
Interest paid **
Loss on sale of fixed assets **
Foreign exchange ** **
Le Non Operating Incomes.
ss:
Dividend received **
Profit on sale of fixed assets **
Interest received ** **
Operating profit before working capital changes ***
Add: Decrease in Current Assets ***
Increase in Current Liabilities *** ***
Less: Increase in Current Assets ***
Decrease in Current Liabilities *** ***
Cash generated from Operating Activities ***

Page 3 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Income tax paid ***
Cash Flow before Extraordinary Items ***
Add/Less: Extra ordinary Items ***
Net Cash Flow from Operating Activities ***

Note: Preparation of Cash Flow Statement using Direct Method has been excluded from the
prescribed syllabus. The format is given since the question has not specified the method
explicitly. Students can refer to the direct method for the knowledge purpose.

Page : 272 , Block Name : Short Answer Questions

Q7 State clearly what would constitute the operating activities for each of the follow in the
following of enterprises:
(i) Hotel
(ii) Film production house
(iii) Financial enterprise
(iv) Media enterprise
(v) Steel manufacturing unit
(vi) Software development business unit.

Answer. (i) Hotels
→ Receipts from sale of goods to customer.
→ Payment of wages and salaries, electricity, food items and other items used in
accommodation.
(ii) Film Production House:
→ Receipts from selling film rights of a film to the distributors.
→ Payment to the staff, actors, actresses, directors, etc.
(ii) Financial Enterprises:
→ Receipts from repayment of loans, interest incomes from investments, etc.
→ Repayment of loans, recovery expenditure for recover of loans etc, salaries of
employees.
(iv) Media Enterprises:

Page 4 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

→ Receipts from advertisements.
→ Payments to staff, reporters, photographers, etc.
(v) Steel Manufacturing Unit:
→ Receipts from sale of steel sheets, steel castings, steel rods, etc.
→ Payment for iron, coal, salaries to staff, etc.
(vi) Software Development Business Unit:
→ Receipts from sale of software and renewal of licenses.
→ Payment of salaries to their employees, etc.

Page : 272 , Block Name : Short Answer Questions

Q8 “The nature/type of enterprise can change altogether the category into which a particular
activity may be classified.” Do you agree? Illustrate your answer.

Answer. Yes, the nature or type of an enterprise can change the category into which a particular
activity may be classified. This can be better understood with the help of an example of two
firms. One engaged in financial services and the other engaged in manufacturing services. For
the firm that is engaged in financial services, interests received or paid are classified under
operating activities whereas for the firm that is engaged in manufacturing business, interests
paid are classified under financing activities and interest received as investing activities.
Therefore, the classification of activities depends on the nature and type of enterprise.

Page : 272 , Block Name : Short Answer Questions

Q1 Describe the procedure to prepare Cash Flow Statement.

Answer. The procedure to prepare Cash Flow Statement is described in the following steps in
their chronological order.
Step 1: Ascertain the cash flows from operating activities
Step 2: Ascertain the cash flows from investing activities
Step 3: Ascertain the cash flows from financing activities
Step 4: Ascertain net increase or decrease by summing up the amounts of Steps 1, 2, and 3.
Step 5: Write the opening balance of cash and cash equivalents and deduct it from the amount
ascertained in Step 4. The resulting figure arrived is the Closing Balance of Cash and Cash
Equivalents.

Page 5 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

There are two methods viz. Direct Method and Indirect Method for the preparation of Cash Flow
Statement.
Direct Method
Cash Flow Statement
Amount Amount
Particulars
Rs Rs
A. Cash Flow from Operating Activities
Cash Sales **
Cash receipt from Debtors **
Less: Cash Purchases **
Cash paid to creditors and other expenses **
Cash Generated from Operating Activities **
Less: Income Tax Paid **
Cash flow before Extraordinary Items **
Add/Less: Extraordinary Items **
Net Cash Flow from (used in) Operating Activities ** **

B. Cash Flow from Investing Activities **
Sale of Fixed Assets **
Sale of long-term Investments **
Interest Received **
Dividend Received **
Rent Received **
Less: Purchase of Fixed Assets **
Less: Purchase of long-term Investment **
Net Cash Flow from Investing Activities ** **

C. Cash Flow from Financing Activities
Proceeds from Issue of Shares **
Proceeds from Issue of Debentures and Other Long-term **
Borrowings
Less: Repayment of Debentures and Other Long-term **

Page 6 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Borrowings
Less: Redemption of Preference Shares **
Less: Interest Paid **
Less: Dividend Paid **
Net Cash flow from Financing Activities ** **
Net Increase (or Decrease in Cash and Cash Equivalents **
(A+B+C)
Cash and Cash Equivalents at the beginning (Cash in Hand, **
Cash at Bank, Marketable Securities, Short-term Deposits)
Cash and Cash Equivalent at the end **

Indirect Method
Cash Flow Statement
Amount Amount
Particulars
Rs Rs
A. Cash Flow from Operating Activities:
Net Profit before tax and extraordinary items ***
Add: Non-Cash Expenses and non operating expenses.
Depreciation **
Goodwill **
Interest paid **
Loss on sale of fixed assets ** **
Less Non-Operating Incomes.
:
Dividend received **
Profit on sale of fixed assets **
Interest received ** **
Operating Profit before Working Capital Changes ***
Add: Decrease in Current Assets ***
Increase in Current Liabilities ** ***

Page 7 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Less: Increase in Current Assets ***
Decrease in Current Liabilities *** ***
Cash generated from Operating Activities ***
Less: Income tax paid ***
Cash flow before Extra ordinary items ***
Add/Less: Extra ordinary items ***
Net Cash Flow from Operating Activities ***

B. Cash Flow from Investing Activities **
Sale of Fixed Assets **
Sale of Long-term Investments **
Interest Received **
Dividend Received **
Rent Received **
Less: Purchase of Fixed Assets **
Less: Purchase of long term Investment **
Net Cash Flow from Investing Activities ** **

C. Cash Flow from Financing Activities
Proceeds from Issue of shares **
Proceeds from Issue of Debentures and other Long-term **
Borrowings
Less: Repayment of Debentures and other Long-term **
Borrowings
Less: Redemption of preference Share **
Less: Interest paid **
Less: Dividend paid **
Net Cash Flow from Financing Activities ** **
Net Increase (or Decrease in Cash and Cash Equivalents **
(A+B+C)
Cash and Cash Equivalents at the beginning (Cash in Hand, **
Cash at Bank, Marketable Securities, Short-term Deposits)
Cash and Cash Equivalents at the end **

Page 8 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Note: Preparation of Cash Flow Statement using Direct Method has been excluded from the
prescribed syllabus. The format is given since the question has not specified the method
explicitly. Students can refer to the direct method for the knowledge purpose.

Page : 272 , Block Name : Long Answer Questions

Q2 Describe"Indirect" method of ascertaining Cash Flow from Operating Activities.

Answer. Indirect Method: This method starts with the Net Profit before tax and extraordinary
items. For this purpose, the Net Profit as revealed by the Profit and Loss Account cannot be
taken into consideration as there exists some items which do not leads to outflow of cash. The
following are those items that need to be added back to the Net Profit of the Profit and Loss
Account.
→ Non-cash items like, depreciation goodwill written off, etc are added to the Net Profit.
→ Non-operating expenses like loss on sale of fixed assets, transfers to reserves, loss on
sale of fixed assets are added back to the Net Profit.
→ Provisions like, provisions for doubtful debts and discount for debtors, proposed
dividends etc. should be added back to the Net Profit.
→ Decrease in current assets and increase in current liabilities should be added to the
operating profit.

The following are those items that need to deduct from the Net Profit of the Profit and Loss
Account.
→ Non-operating incomes like profit on sale of fixed assets, etc. are deducted from the Net
Profit.
→ Non-trading Incomes like dividend received, interest received, tax refund, etc. are to be
deducted from the Net Profit.
→ Increase in current assets and decrease in current liabilities should be deducted from the
operating profit.
Indirect Method
Cash Flow Statement
Amount Amount
Particulars
Rs Rs
Cash Flow from Operating Activities:
Net Profit before tax and extraordinary items ***

Page 9 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Add: Non-Cash Expenses and Non-Operating Expenses.
Depreciation **
Goodwill **
Interest paid **
Loss on sale of fixed assets ** **
Less:Non-Operating Incomes.
Dividend received **
Profit on sale of fixed assets **
Interest received ** **
Operating Profit before Working Capital Changes ***
Add: Decrease in Current Assets ***
Increase in Current Liabilities ** ***
Less: Increase in Current Assets ***
Decrease in Current Liabilities *** ***
Cash generated from Operating Activities ***
Less: Income tax paid ***
Cash flow before Extra ordinary items ***
Add/Less: Extra ordinary items ***
Net Cash Flow from Operating Activities ***

Page : 272 , Block Name : Long Answer Questions

Q3 Explain the major Cash Inflow and outflows from investing activities.

Answer. Investing activities are those activities that are related to sales and purchases of long-
term fixed assets like, land and building, plant and machinery, furniture, etc. These fixed assets
are not held for resale. The activities like sale and purchase of investments that are not included
in the cash equivalents are also included in Investing activities. Any income arising from such
investments (assets) are regarded a part of investing activities.
As per the AS3, the major cash inflows and outflows from investing activities are as follows:
→ Cash payments to acquire fixed assets (including intangibles like, goodwill). These
payments include capitalised cost of research and development and self constructed
fixed assets.

Page 10 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

→ Cash receipts from disposal of fixed assets (including intangible assets).
→ Cash payments to acquire shares, warrants, or debt instruments of other enterprises and
interest in joint venture (other than payments of those instruments consider as cash
equivalents and are held for the trading purposes).
→ Cash receipts from disposal of shares, warrants or debt instruments of other enterprises
and interest from joint ventures (other than receipts from those held for trading
purposes).
→ Cash advances and loans made to third parties (other than advances, and loans made
by financial enterprises). These will be treated as cash flows from the operating
activities.
→ Cash receipts from repayment of advances and loans made to third parties (other than
advances and loans of financial enterprises). These will be treated as cash flows from
operating activities.
→ Cash receipts from insurance company for any property involved in accident.
→ Any income arising from fixed assets or investments like interest, dividend, rent etc. In
case of financial enterprises interest and dividend is treated as operating activities.
Direct Method
Cash Flow Statement
Amount Amount
Particulars
Rs Rs
Net Cash Flow ** **
from (used in)
Operating
Activities

B. Cash Flow from **
Investing
Activities
Sale of Fixed **
Assets
Sale of long- **
term
Investments
Interest **
Received
Dividend **
Received
Rent Received **
Less: Purchase **
of Fixed Assets

Page 11 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Less: Purchase **
of long-term
Investments
Net Cash Flow ** **
from Investing
Activities
Indirect Method
Cash Flow Statement

Amount Amount
Particulars
Rs Rs
Net Cash Flow from Operating Activities ***

Cash Flow from Investing Activities **
Sale of Fixed Assets **
Sale of Long-term Investments **
Interest Received **
Dividend Received **
Rent Received **
Less: Purchase of Fixed Assets **
Less: Purchase of long term Investment **
Net Cash Flow from Investing Activities ** **
Note: Preparation of Cash Flow Statement using Direct Method has been excluded from the
prescribed syllabus. The format is given since the question has not specified the method
explicitly. Students can refer to the direct method for the knowledge purpose.

Page : 272 , Block Name : Long Answer Questions

Q4 Explain the major Cash Inflows and outflows from financing activities.

Answer. Financing activities are those activities that are related to capital or long term funds of
an enterprise. These activities results in the change in the capital and borrowed funds.
As per the AS3, the major cash inflows from financing activities are as follows:
→ Cash proceeds from issue of shares and other similar instruments.

Page 12 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

→ Cash proceeds from issue of debentures, loans, notes, bonds, and other short and long-
term borrowings.
As per the AS3, the major cash outflows from financing activities are as follows:
→ Cash repayments of the amount borrowed in form of debentures, loans, notes bonds,
and other short and long-term borrowings.
→ Buy-back of shares and debentures.
→ Interest paid on debentures, loans, and advances.
→ Dividend paid to the preference shareholders and equity shareholders.
An important point that must be noted is that the purchase and sale of securities, interest paid or
received and dividend received is treated as cash flow from operating activities for an
investment company. But dividend paid is treated as cash flow from financing activities.
Direct Method
Cash Flow Statement
Amount Amount
Particulars
Rs Rs
Net Cash Flow from Investing Activities ** **
Cash Flow from Financing Activities
Proceeds from Issue of Shares **
Proceeds from Issue of Debentures and Other Long-term **
Borrowings
Less: Repayment of Debentures and Other Long-term **
Borrowings
Less: Redemption of Preference Shares **
Less: Interest Paid **
Less: Dividend Paid **
Net Cash flow from Financing Activities ** **
Net Increase (or Decrease in Cash and Cash Equivalents **
(A+B+C)
Cash and Cash Equivalents at the beginning (Cash in Hand, **
Cash at Bank, Marketable Securities, Short-term Deposits)
Cash and Cash Equivalent at the end **

Indirect Method
Cash Flow Statement

Page 13 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Particulars Amount Amount
Rs Rs
Net Cash Flow ** **
from Investing
Activities
Cash Flow from
Financing
Activities
Proceeds from **
Issue of shares
Proceeds from **
Issue of
Debentures
and other Long-
term
Borrowings
Less: **
Repayment of
Debentures
and other Long-
term
Borrowings
Less: **
Redemption of
preference
Share
Less: Interest **
paid
Less: Dividend **
paid
Net Cash Flow ** **
from Financing
Activities
Net Increase **
(or Decrease in
Cash and Cash
Equivalents
(A+B+C)
Cash and Cash **
Equivalents at
the beginning

Page 14 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

(Cash in Hand,
Cash at Bank,
Marketable
Securities,
Short-term
Deposits)
Cash and Cash **
Equivalents at
the end
Note: Preparation of Cash Flow Statement using Direct Method has been excluded from the
prescribed syllabus. The format is given since the question has not specified the method
explicitly. Students can refer to the direct method for the knowledge purpose.

Page : 272 , Block Name : Long Answer Questions

Q1 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 gain of Rs 50,000 on
assets sold which was credited to profit and loss account. Bills Receivables
increased during the year Rs 40,000 and Bills Payables also increased by Rs 60,000.
Compute the cash flow operating activities by the indirect approach.
Answer.
Cash Flow from Operating Activities
as on March 31, 2017
Amount Amount
Particulars Rs Rs

Net Profit during the year 5,00,000
Items to be adjusted:
Add: Depreciation 2,00,00
0
Less: Gain on sale of assets (50,000 1,50,000
)
Operating Profit before Working Capital 6,50,000
changes
Add: Increase in Bills Payable 60,000

Page 15 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Less: Increase in Bills Receivable (40,000 20,000
)
Net Cash from Operations 6,70,000

Page : 272 , Block Name : Numeric Questions

Q2 From the information given below you are required to prepare the cash paid for
the inventory:

Rs
Inventor 40,000
y in the
beginni
ng
Purchas 1,60,000
es
Inventor 38,000
y in the
end
Trade 14,000
payable
s in the
beginni
ng
Trade 14,500
payable
s in the
end

Answer.
Trade Payables Account
Dr. Cr.
Amount Amount
Dat
e Particulars J.F. Rs Date Particulars J.F. Rs
To Cash A/c 1,59,50 By Balance b/d 14,000
(Balancing

Page 16 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

fig.) 0
To Balance 14,500 By Purchases A/c 1,60,000
c/d
1,74,00 1,74,000
0

Cash paid for Inventory amounts to Rs 1,59,500

Page : 273 , Block Name : Numeric Questions

Q3 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% drawn 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.
Answer.
(a) Amount paid for machinery = 250000 × 20/100 = 50000
Part payment Rs 50,000 for acquiring machinery Rs 2,50,000 is related with
Investing Activities
(b) Rs
Amount paid for acquiring shares (2,50,000)
Dividend received 50,000
Net Cash used in Investing Activities (2,00,000)
Amount paid to acquire assets and dividend received is a part of Investing
Activities.
(c) Inflow of cash of Rs 60,000 on sale of machinery is a part Investing Activities.

Page : 273 , Block Name : Numeric Questions

Q4 The following is the Profit and Loss Account of Yamuna Limited:

Page 17 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Statement of Profit and Loss of Yamuna Ltd.
for the Year ended March 31, 2017

Note Amount
Particulars
No. (Rs)
i) Revenue from Operations 10,00,0
00
ii) Expenses
Cost of Material 1 50,000
Consumed
Purchase of Stock-in-trade 5,00,00
0
Other Expenses 2 3,00,00
0
Total Expenses 8,50,00
0
iii) Profit before Tax (I – ii) 1,50,00
0
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 creditors decrease by Rs 15,000 during the year.
(iv) Outstanding expenses payable increased by Rs 3,000 during the year.
(v) Operating expenses included depreciation of Rs 25,000.
Compute net cash provided by operations for the year ended March 31, 2017 by the
indirect method.
Answer.
In the books of Yamuna Limited
Cash Flow from Operating Activities
as on March 31, 2017
Amount Amount
Particulars Rs Rs

Page 18 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Net Profit earned during the year 1,50,000
Items to be added:
Depreciation 25,000
Operating Profit before Working Capital changes 1,75,000
Add Increase in Current Liabilities
:
Outstanding Expenses 3,000
Add Decrease in Current Assets
:
Trade Receivables 30,000
Stock 50,000 83,000
Les Decrease in Current Liabilities
s:
Trade Creditors (15,000)
Les Increase in Current Assets
s:
Prepaid Expenses (5,000) (20,000)
Net Cash from Operations 2,38,000

Page : 273 , Block Name : Numeric Questions

Q5 Compute cash from operations from the following figures:
(i) Profit for the year 2016-17 is a sum of Rs. 10,000 after providing for depreciation
of Rs. 2,000.
(ii) The current assets of the business for the year ended March 31, 2016 and 2017
are as follows:

March March
31, 2016 31, 2017
(Rs.) (Rs.)
Trade Receivables 14,000 15,000
Provision for Doubtful 1,000 1,200
Debts

Page 19 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Trade Payables 13,000 15,000
Inventories 5,000 8,000
Short-term 10,000 12,000
Investments
Expenses payable 1,000 1,500
Prepaid Expenses 2,000 1,000
Accrued Income 3,000 4,000
Income received in 2,000 1,000
advance
Answer.
Cash Flow Statement
for the Year Ending March 31, 2017
Details Amount
Particulars
(Rs) (Rs)
Cash from Operating Activities
Net Profit 10,000
Items to be added:
Depreciation 2,000 2,000
Operating Profit before Working Capital Adjustments 12,000
Less: Increase in Current Assets
Trade Receivables (1,000)
Accrued Income (1,000)
Short-term Investments (2,000)
Inventories (3,000)
Add: Increase in Current Liabilities
Provision for Doubtful Debts 200
Trade Payables 2,000
Expense Payable 500
Add: Decrease in Current Assets
Prepaid Expenses (1,000)
Less: Decrease in Current Liabilities

Page 20 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Income received in advance 1,000

Net Cash From Operating Activities 7,700

Page : 273 , Block Name : Numeric Questions

Q6 From the following particulars of Bharat Gas Limited, calculate Cash Flows from
Investing Activities. Also, show the workings clearly preparing the ledger accounts:
Balance Sheet of Bharat Gas Ltd. as on 31 Mar. 2016 and 31 Mar. 2017
Figures as
Not Figures as at the
the end of
Particulars e end of reporting 2016
2017
No. (Rs)
(Rs)
II) Assets
1. Non-current Assets
a) Fixed assets
i) Tangible assets 1 12,40,000 10,20,000
ii) Intangible assets 2 4,60,000 3,80,000
b) Non-current 3 3,60,000 2,60,000
investments
Notes 1 Tangible assets = Machinery
2 Intangible assets = Patents
Figures of Figures of previous year
current year

1. Tangible
Assets
Machinery 12,40,000 10,20,000
2. Intangible
Assets
Goodwill 3,00,000 1,00,000
Patents 1,60,000 2,80,000

Page 21 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

4,60,000 3,80,000
3. Non-current
Investments
10% long term 1,60,000 60,000
investments
Investment in 1,00,000 1,00,000
land
Shares of 1,00,000 1,00,000
Amartex Ltd.
3,60,000 2,60,000

Additional Information:
(a) Patents were written-off to the extent of Rs. 40,000 and some Patents were sold
at a profit of Rs. 20,000.
(b) A Machine costing Rs. 1,40,000 (Depreciation provided thereon Rs. 60,000) was
sold for Rs. 50,000. Depreciation charged during the year was Rs. 1,40,000.
(c) On March 31, 2016, 10% Investments were purchased for Rs. 1,80,000 and some
Investments were sold at a profit of Rs. 20,000. Interest on Investment was received
on March 31, 2017.
(d) Amartax Ltd. paid Dividend @ 10% on its shares.
(e) A plot of Land had been purchased for investment purposes and let out for
commercial use and rent received Rs. 30,000.
Answer.
Cash Flow from Investing Activities
Amoun
t Amount
Particul
ars Rs Rs
Cash
Inflow
Procee 1,00,00
ds from 0
Sale of
Patents
Procee 50,000
ds from
Sale of

Page 22 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Machin
ery
Procee 1,00,00
ds from 0
Sale of
10%
Long-
term
Invest
ment
Interest 6,000
receive
d on
10%
Long-
term
Invest
ment
Dividen 10,000
d
Receiv
ed
from
Amarta
x Ltd.
Rent 30,000 2,96,000
Receiv
ed
Cash
Outflow
Purcha (2,00,0
se of 00)
Goodwi
ll
Purcha (4,40,0
se of 00)
Machin
ery
Purcha (1,80,0 (8,20,000)
se of 00)
10%
Long-

Page 23 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

term
Invest
ment
Net (5,24,000)
Cash
used in
Investi
ng
Activiti
es

Patents Account
Dr. Cr.
Amoun
t Amount
Dat
e Particulars J.F. Rs Date Particulars J.F. Rs
To Balance 2,80,0 By Profit and Loss 40,000
b/d 00 A/c (written off)
To Profit 20,000 By Bank A/c 1,00,000
and
(sale- Balancing
Loss A/c
figure)
(Profit on
sale)
By Balance c/d 1,60,000
3,00,0 3,00,000
00

Machinery Account
Dr. Cr.
Amount Amount
Dat Dat
e Particulars J.F. Rs e Particulars J.F. Rs
To Balance 10,20,0 By 1,40,00
b/d 00 Depreciation 0

Page 24 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

A/c
To Bank A/c 4,40,00 By Bank A/c 50,000
(Purchases- 0
Balancing
figure)
By Profit and 30,000
Loss A/c
By Balance 12,40,0
c/d 00
14,60,0 14,60,0
00 00

10% Long-term Investment Account
Dr. Cr.
Amoun Amoun
t t
Dat Dat
e Particulars J.F. Rs e Particulars J.F. Rs
Balance 60,000 Bank 1,00,0
b/d (Balancing 00
figure)
Bank 1,80,0
00
Profit and 20,000 Balance c/d 1,60,0
Loss 00
(Profit on
sale)

2,60,0 2,60,0
00 00

Page : 274 , Block Name : Numeric Questions

Q7 From the following Balance Sheet of

Page 25 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Mohan Ltd. Prepare cash flow Statement:
Balance Sheet of Mohan Ltd.
as at 31 Mar. 2016 and 31 Mar. 2017
March March
Not
31, 31,
Particulars e
2017 2016
No.
(Rs) (Rs)
I) Equity and
Liabilities
1. Shareholders’
Funds
a) Equity share 3,00,0 2,00,0
capital 00 00
b) Reserves and 2,00,0 1,60,0
surplus 00 00
2. Non-current
liabilities
a) Long-term 1 80,00 1,00,0
borrowings 0 00
3. Current liabilities
Trade payables 1,20,0 1,40,0
00 00
Short-term provisions 2 70,000 60,000
Total 7,70,0 6,60,0
00 00
II) Assets
1. Non-current assets
a) Fixed assets 3 5,00,0 3,20,0
00 00
2. Current assets
a) Inventories 1,50,0 1,30,0
00 00
b) Trade receivables 4,90,0 1,20,0
00 00
c) Cash and cash 5,30,0 90,000
equivalents 00

Page 26 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Total 7,70,0 6,60,0
00 00

Notes

2017 2016
1. Long-term
borrowings
Bank Loan 80,000 1,00,0
00
2. Short-term provision
Proposed dividend 70,000 60,000
3. Fixed assets 6,00,0 4,00,0
00 00
Less: Accumulated 1,00,0 80,000
Depreciation 00
(Net) Fixed Assets 5,00,0 3,20,0
00 00
4. Trade receivables
Debtors 60,000 1,00,0
00
Bills receivables 30,000 20,000
90,000 1,20,0
00
5. Cash and cash
equivalents
Bank 30,000 90,000

Additional Information:
Machine Costing Rs. 80,000 on which accumulated depreciation was Rs. 50,000 was
sold for Rs. 20,000.
Answer.
In the books of Mohan Ltd.
Cash Flow Statement
Particulars Amount Amount

Page 27 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Rs Rs
A. Cash Flow from Operating
Activities
Profit as per the Balance Sheet
(2,00,000 – 1,60,000) 40,000
Proposed Dividend 70,000
Net Profit before Taxation and
Extraordinary items 1,10,000
Adjustments:
Depreciation 70,000
Loss on Sale of Machine 10,000 80,000
Operating Profit before
Working Capital changes 1,90,000
A Decrease in Current
d Assets
d
:
Debtors 40,000 40,000
2,30,000
L Increase in Current
e Assets
s
s:
Inventories (20,000)
Bills Receivable (10,000)
L Decrease in Current
e Liabilities
s
s:
Trade Payables (20,000) (50,000)
Net Cash from Operations 1,80,000
B. Cash Flow from Investing
Activities
Proceeds from Sale of 20,000

Page 28 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Fixed Assets
Purchases of Fixed Assets (2,80,000)
Net Cash outflow from
Investing activity (2,60,000)

C. Cash Flow from Financing
Activities
Issue of Shares 1,00,000
Bank Loan Paid (20,000)
Dividend Paid (60,000)
Net Cash from Financing
Activities 20,000

D. Net Decrease in Cash and Cash
Equivalents (A+B+C) (60,000)
A Cash and Cash
d Equivalents in the
d beginning
: 90,000

E. Cash and Cash equivalents at
the end 30,000

Fixed Assets Account
Dr. Cr.
Amoun Amoun
t t
Dat Dat
e Particulars J.F. Rs e Particulars J.F. Rs
To Balance 4,00,0 By Bank A/c
b/d 00 20,000
To Bank A/c By Profit and
(Purchases- Loss A/c
Balancing 2,80,0
fig.) 00 10,000

Page 29 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

By
Accumulated
Depreciation
A/c 50,000
By Balance 6,00,0
c/d 00
6,80,0 6,80,0
00 00

Accumulated Depreciation Account
Dr. Cr.
Amoun Amoun
t t
Dat Dat
e Particulars J.F. Rs e Particulars J.F. Rs
To Fixed By Balance
Assets A/c 50,000 b/d 80,000
By Profit
and Loss
A/c
To Balance 1,00,0 (Balance
c/d 00 fig.) 70,000
1,50,0 1,50,0
00 00

Page : 275 , Block Name : Numeric Questions

Q8 From the following Balance Sheets of Tiger Super Steel Ltd., prepare Cash Flow
Statement:
Balance Sheet of Tiger Super Steel Ltd. as on 31 Mar. 2016
and 31 Mar. 2017
March 31, March 31,
Note
Particulars 2017 2016
No.
(Rs) (Rs)

Page 30 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital 1 1,30,000 2,00,000
b) Reserves and surplus 2 22,800 15,200
2. Current Liabilities
a) Trade payables 3 21,200 14,000
b) Other current liabilities 4 2,400 3,200
c) Short-term provisions 5 38,400 22,400
Total 2,14,800 1,74,800
II) Assets
1. Non-Current Assets
a) Fixed assets
i) Tangible assets 6 96,400 76,000
ii) Intangible assets 18,800 24,000
b) Non-current investments 14,000 4,000
2. Current assets
a) Inventories 31,200 34,000
b) Trade receivables 43,200 30,000
c) Cash and cash equivalents 11,200 6,800
Total 2,14,800 1,74,800

Notes to accounts:

2017 2016
1. Share Capital
Equity share capital 1,20,00 80,000
0
10% Preference share capital 20,000 40,000
1,40,00 1,20,00
0 0
2. Reserves and surplus

Page 31 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

General reserve 12,000 8,000
Balance in statement of profit 10,800 7,200
and loss
22,800 15,200
3. Trade payables
Bills payable 21,200 14,000

4. Other current liabilities
Outstanding expenses 2,400 3,200

5. Short-term provisions
Provision for taxation 12,800 11,200
Proposed dividend 15,600 11,200
28,400 22,400
6. Tangible assets
Land and building 20,000 40,000
Plant 76,400 36,000
96,400 76,000

Answer.
In the books of Tiger Super Steels Ltd
Cash Flow Statement
Amoun
t Amount
Particu
lars Rs Rs
A. Cash
Flow
from
Operat
ing
Activiti
es

Page 32 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Profit 3,600
as per
the
Balanc
e
Sheet
(10,80
0–
7,200)
Gener 4,000
al
Reserv
e
Propos 15,600
ed
Divide
nd
Provisi 12,800
on for
Taxatio
n
Net
Profit
before
Taxatio
n and
Extrao
rdinary 36,000
Items
to be
added:
Deprec 20,000
iation
on
Land
and
Buildin
g
Deprec 10,000
iation
on
Plant

Page 33 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Goodw 5,200
ill
written
off 35,200
Operat
ing
Profit
before
Workin
g
Capital
chang
es 71,200

Add: Increa
se in
Curren
t
Liabiliti
es
Bills 7,200
Payabl
e
Add: Decrea
se in
Curren
t
Assets
Invent 2,800
ories 10,000
81,200
Less: Increa
se in
Curren
t
Assets
Trade (13,20
Receiv 0)
ables
Less: Decrea
se in

Page 34 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Curren
t
Liabiliti
es
Outsta (800)
nding
Expen (14,00
ses 0)
Cash
Gener
ated
from
Operat
ing
Activiti
es 67,200
Less: Incom
e Tax (11,20
paid 0)
Net
Cash
from
Operat
ing
Activiti
es 56,000

B. Cash
Flow
from
Investi
ng
Activiti
es
Purcha
ses of
Plant (40,400)
Purcha
ses of
Invest
ment (20,000)
Net (60,400)

Page 35 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Cash
used
in
Investi
ng
Activiti
es

C. Cash
Flow
from
Financi
ng
Activiti
es
Issue
of
Equity
Shares 40,000
Divide
nd
paid (11,200)
Redem
ption
of 10%
Prefere
nce
Shares (20,000)
Net
Cash
from
Financi
ng
Activiti
es 8,800

D. Net 4,400
Increa
se in
Cash
and
Cash

Page 36 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Equiva
lent
Add: Cash
and
Cash
Equiva
lent in
the
beginn
ing 6,800
E. Cash
and
Cash
Equiva
lents
at the
end 11,200

Working Notes:
Plant Account
Dr. Cr.
Amou Amou
nt nt
Dat Dat
e Particulars J.F. Rs e Particulars J.F. Rs
To Balance By
b/d 36,00 Depreciation 10,00
0 A/c 0
To Bank A/c
(Purchases-
Balancing 50,40 By Balance 76,40
figure) 0 c/d 0
86,40 86,40
0 0

2.

Net Profit before Tax 3,600
Profit and Loss Account 12,800

Page 37 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Less: Provision for Tax 16,400

Page : 276 , Block Name : Numeric Questions

Q9 From the following information, prepare cash flow
statement:
31st 31st
Not
March March
Particulars e
2015 2014
No.
(Rs) (Rs)
I) Equity and
Liabilities
1. Shareholders’
Funds
a) Share capital 7,00,000 5,00,00
0
b) Reserves and 4,70,000 2,50,00
surplus 0
2. Non-current
Liabilities
(8% Debentures) 4,00,000 6,00,00
0
3. Current Liabilities
a) Trade payables 9,00,000 6,00,00
0
Total 24,70,000 19,50,0
00
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible 7,00,000 5,00,00
0
ii) Intangible-Goodwill 1,70,000 2,50,00
0
2. Current assets

Page 38 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

a) Inventories 6,00,000 5,00,00
0
b) Trade Receivables 6,00,000 4,00,00
0
c) Cash and cash 4,00,000 3,00,00
equivalents 0
Total 24,70,000 19,50,0
00

Additional Information:
Depreciation Charge on Plant amount to Rs. 80,000.

Answer.
Cash Flow Statement
for the year ending March 31, 2015
Details Amount
Particulars
(Rs) (Rs)
A. Cash from Operating Activities
Net Profit 2,20,000
Items to be Added:
Interest on Debentures 48,000
Depreciation on Fixed Assets 80,000
Goodwill Written-off 80,000 2,08,000
Operating Profit before Working Capital 4,28,000
Adjustments
Add: Increase in Current Liabilities
Creditors 3,00,000
Less: Increase in Current Assets
Inventories (1,00,000
)
Trade Receivables (2,00,000 -
)
Cash Generated from Operations 4,28,000

Page 39 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Less: Tax Paid -
Net Cash From Operating Activities 4,28,000

B. Cash From Investing Activities
Purchase of Fixed Assets (WN) (2,80,000
)
Net Cash From Investing Activities (2,80,000)

C. Cash From Financing Activities
Issue of Share Capital 2,00,000
Redemption of Debentures (2,00,000
)
Interest Paid on Debentures (48,000) (48,000)
Net Cash From Financing Activities (C) (48,000)
Net Increase in Cash (A + B + C) 1,00,000
Add: Opening Cash and Cash Equivalents 3,00,000
Closing Cash and Cash Equivalents 4,00,000

Working Note:
Fixed Assets Account
Dr.
Amoun
Amount
Particulars J.F. t Particulars J.F.
(Rs)
(Rs)
To Balance b/d 5,00,0 By Depreciation A/c 80,000
00
To Purchases A/c
(Balancing Figure) 2,80,0 By Balance c/d 7,00,00
00 0
. .
. .
7,80,0 7,80,00

Page 40 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

00 0

Page : 277 , Block Name : Numeric Questions

Q10 From the following Balance Sheet of Yogeta
Ltd., prepare cash flow statement:
31st 31st
Not
March March
Particulars e
2017 2016
No.
(Rs) (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital 1 4,00,000 2,00,00
0
b) Reserves and 2,00,000 1,00,00
surplus-Surplus 0
2. Non-current
Liabilities
a) Long-term 2 1,50,000 2,20,00
borrowings 0
3. Current Liabilities
a) Short-term 1,00,000 -
borrowings
(Bank overdraft)
b) Trade payables 70,000 50,000
c) Short-term provision 50,000 30,000
(Provision for taxation)
Total 9,70,000 6,00,00
0
II) Assets
1. Non-current assets

Page 41 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

a) Fixed assets
i) Tangible 7,00,000 4,00,00
0
2. Current assets
a) Inventories 1,70,000 1,00,00
0
b) Trade Receivables 1,00,000 50,000
c) Cash and cash - 50,000
equivalents
Total 9,70,00 6,00,00
0 0

Notes to Accounts

31st 31st
March March
Particulars
2017 2016
(Rs) (Rs)
1. Share capital
a) Equity share capital 3,00,00 2,00,0
0 00
b) Preference share 1,00,00 -
capital 0
4,00,00 2,00,0
0 00
2. Long term
borrowings
Long-term loan - 2,00,0
00
Long-term Rahul 1,50,00 20,000
0
1,50,00 2,20,0
0 00

Additional Information:
Net Profit for the year after charging Rs. 50,000 as Depreciation was Rs. 1,50,000.

Page 42 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Dividend paid on Share was Rs. 50,000, Tax Provision created during the year
amounted to Rs. 60,000.
Answer.
In the books of Yogeta Ltd.
Cash Flow Statement
Amount Amount
Particulars Rs Rs
A. Cash Flow from Operating Activities
Profit as per Balance Sheet (2,00,000 –1,00,000) 1,00,000
Proposed Dividend 50,000
Provision for Taxation 60,000
Net Profit before Taxation and Extraordinary items 2,10,000
Items to be added:
Depreciation 50,000 50,000
Operating Profit before Working Capital changes 2,60,000
Add: Increase in Current liabilities
Trade Payable 20,000 20,000
2,80,000
Less: Increase in Current Assets
Inventories (70,000)
Trade Receivable (50,000) (1,20,000)
Cash Generated from Operating Activities 1,60,000

Less: Income Tax paid (40,000)
Net Cash from Operations 1,20,000

B. Cash Flow from Investing Activities
Purchases of Fixed Assets (3,50,000)
Net Cash used in Investing Activities (3,50,000)

C. Cash Flow from Financing Activities

Page 43 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Issue of Equity Shares 1,00,000
Issue of Preference Shares 1,00,000
Loan from Rahul 1,30,000
Less: Repayment of Loan (2,00,000)
Dividend Paid (50,000)
Net Cash from Financing Activities 80,000

D. Net decrease in Cash and Cash Equivalent (A+B+C) (1,50,000)
Add: Cash and Cash Equivalents in the beginning 50,000
E. Cash and Cash Equivalents at the end (Bank Overdraft) (1,00,000)

Working Notes:
1.Provision for Taxation Account
Dr. Cr.
Amoun Amoun
t t
Dat Dat
e Particulars J.F. Rs e Particulars J.F. Rs
To Bank A/c 40,000 By Balance 30,000
(Balancing b/d
figure)
To Balance 50,000 By Profit and 60,000
c/d Loss A/c
90,000 90,000

2.Fixed Assets Account
Dr. Cr.
Amoun Amoun
t t
Dat Dat
e Particulars J.F. Rs e Particulars J.F. Rs

Page 44 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

To Balance 4,00,00 By 50,000
b/d 0 Depreciation
A/c
To Bank A/c 3,50,00 By Balance 7,00,00
0 c/d 0
7,50,00 7,50,00
0 0

Page : 278 , Block Name : Numeric Questions

Q11 Following is the Financial Statement of
Garima Ltd., prepare cash flow statement.
31st 31st
Not
March March
Particulars e
2017 2016
No.
(Rs) (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital 1 4,40,000 2,80,00
0
b) Reserve and 2 40,000 28,000
surplus-Surplus
2. Current Liabilities
a) Trade payables 1,56,000 56,000
c) Short-term 12,000 4,000
provisions
(Provision for taxation)
Total 6,48,000 3,68,00
0
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible 3,64,000 2,00,00
0

Page 45 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

2. Current assets
a) Inventories 1,60,000 60,000
b) Trade receivables 80,000 20,000
c) Cash and cash 28,000 80,000
equivalents
d) Other current assets 16,000 8,000
Total 6,48,00 3,68,00
0 0

Notes to Accounts

31st 31st
March March
Particulars
2017 2016
(Rs) (Rs)
1. Share capital
a) Equity share capital 3,00,00 2,00,0
0 00
b) Preference share 1,40,00 80,000
capital 0
4,40,00 2,80,0
0 00
2. Reserve and surplus
Surplus in statement 28,000
of profit and loss at
the beginning of the
year
Add: Profit of the year 16,000
Less: Dividend 4,000
Profit at the end of the 40,000
year

Additional Information:
Interest paid on Debenture Rs 600
Dividend paid during the year Rs 4,000

Page 46 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Depreciation charged during the year Rs 32,000

Answer.
Cash Flow Statement (Indirect Method)
Amount Amount
Particulars
Rs Rs
A. Cash Flow from Operating
Activities
Profit as per Balance Sheet
(40,000 – 28,000) 12,000
Proposed Dividend 4,000
Provision for Taxation 12,000
Net Profit before Taxation and
Extraordinary items 28,000
Items to be added:
Interest paid on Debentures 600
Depreciation 32,000 32,600
Operating Profit before Working 60,600
Capital changes
Add: Increase in Current
liabilities
Trade Payables 1,00,000
Less: Increase in Current Assets
Other Current Assets (8,000)
Inventories (1,00,000
)
Trade Receivables (60,000) (68,000)
Cash generated from Operating (7,400)
Activities

Less: Income Tax paid (4,000)
Net Cash used in Operating (11,400)
Activities

Page 47 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

B. Cash Flow from Investing
Activities
Purchase of Fixed Assets (1,96,00
0)
Net Cash used in Investing (1,96,00
Activities 0)

C. Cash Flow from Investing
Activities
Issue of Equity Shares 1,00,000
Issue of Preference Shares 60,000
Less: Interest Paid on (600)
Debentures
Less: Dividend Paid (4,000)
Net Cash from Financing 1,55,400
Activities

D. Net decrease in cash and cash
equivalent (A+B+C) (52,000)
Add: Cash and Cash Equivalents
in the beginning 80,000
E. Cash and Cash Equivalents at
the end 28,000

Working Notes:
Plant and Machinery Account
Dr. Cr.
Amoun Amoun
t t
Dat Dat
e Particulars J.F. Rs e Particulars J.F. Rs
To Balance 2,00,0 By 32,000
b/d 00 Depreciation

Page 48 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

A/c
To Bank A/c 1,96,0 By Balance 3,64,0
(Purchases- 00 c/d 00
Balancing
fig.)
3,96,0 3,96,0
00 00

Page : 279 , Block Name : Numeric Questions

Q12 From the following Balance Sheet of Computer India Ltd., prepare cash flow
statement.
(Rs in '000)

31st 31st
Not
March March
Particulars e
2017 2016
No.
(Rs) (Rs)
I) Equity and
Liabilities
1. Shareholders’
Funds
a) Share capital 50,000 40,000
b) Reserves and 1 3,700 3,000
surplus-Surplus
2. Non-Current
Liabilities
10% Debentures 6,500 6,000
3. Current Liabilities
a) Short-term 2 6,800 12,500
borrowings
b) Trade payables 11,000 12,000
c) Short-term 3 10,000 8,000
provisions
Total 88,000 81,500

Page 49 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

II) Assets
1. Non-current assets
a) Fixed assets 4 25,000 30,000
2. Current assets
a) Inventories 35,000 30,000
b) Trade receivables 24,000 20,000
c) Cash and cash 3,500 1,200
equivalents-cash
d) Other current 500 300
assets-prepaid exp.
Total 88,000 81,500

Notes to Accounts

31st 31st
March March
Particulars
2017 2016
(Rs) (Rs)
1. Reserve and surplus
(i) Balance in statement of
1,200 1,000
profit and loss
(ii) General reserve 2,500 2,000
3,700 3,000

2. Short-term borrowings
Bank Overdraft 6,800 12,500

3. Short-term provisions
(i) Provision for taxation 4,200 3,000
(ii) Proposed dividend 5,800 5,000
10,000 8,000

4. Fixed Assets:

Page 50 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

Fixed Assets 40,000 41,000
(11,000
Less: Accumulated Depreciation (15,000)
)
25,000 30,000

Additional Information:
Interest paid on Debenture Rs. 600
Answer.
In the books of Computer India Ltd.
Cash Flow Statement
('00,000)
Amount Amount
Particulars Rs Rs
A. Cash Flow from Operating Activities
Profit as per Balance Sheet (1,200 – 1,000) 200
Proposed Dividend 5,800
General Reserve 500
Provision for Taxation 4,200
Net Profit before Tax and Extraordinary items 10,700
Items to be added
Provision for Depreciation 4,000
Interest paid on Debentures 600 4,600
Operating Profit before Working Capital changes 15,300
Adjustments
Less Increase in Current Assets
:
Trade Receivables (4,000)
Inventories (5,000)
Prepaid Expenses (200) (9,200)
6,100
Less Decrease in Current Liabilities

Page 51 of 52 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-6 Accountancy

:
Trade Creditors (1,000) (1,000)
Cash generated from Operating Activities 5,100
Less Income Tax Paid
: (3,000)
Net Cash from Operation 2,100

B. Cash Flow from Investing Activities
Sale of Fixed Assets 1,000
Net Cash from Investing Activities 1,000

C. Cash Flow from Financing Activities
Issue of Equity Shares 10,000
Issue of 10% Debentures 500
Less Dividend paid
: (5,000)
Less Interest paid
: (600)
Net Cash from Financing Activities 4,900

D. Net Increase in Cash and Cash Equivalent (A+B+C) 8,000
Add: Cash and Cash Equivalent in the beginning
Cash 1,200
Bank overdraft (12,500) (11,300)

E. Cash and Cash Equivalents at the end
Cash 3,500
Bank overdraft (6,800) (3,300)

Page : 280 , Block Name : Numeric Questions

Page 52 of 52 Aglasem Schools