NCERT Solution For Class 12 Accountancy Chapter 6 - Cash Flow Statement

NCERT Solutions are said to be an extremely helpful book while preparing for the CBSE Class 12 Accountancy examinations. This study material owns a deep knowledge and the Solutions collected by the subject matter exerts are no distinct.

NCERT Solution For Class 12 Accountancy Chapter 6 – Cash Flow Statement provides us an all-inclusive data to all the concepts. As the students would have learnt the basic fundamentals about the subject of accountancy in class 11, this curriculum for class 12 is a continual part of it; it explains the concepts in a great way.

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Access the solution for class 12 Accountancy Chapter 6 – Cash Flow Statement

Short Questions for NCERT Accountancy Solutions Part 2 Class 12 Chapter 6

1. What is a Cash Flow Statement?

A financial statement that represents the inflow and outflow of cash and cash equivalents of a company is called a cash flow statement. It shows how well a company can manage its cash position and generates enough cash to pay the obligations in the form of debt and also run the operational expenses.

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

Three types of activities are defined:

1. Operating Activities

2. Financing Activities

3. Investing Activities

3. State the uses of cash flow statement?

Following are uses of cash flow statement:

1. Useful for evaluating cash position of a firm

2. Helpful in finding deficiencies and variations in firms performance which helps in effective decision making

3. It helps in assessment of liquidity of a company

4. It analyses cash receipts and payments from the various activities of a company and helps in short term planning

5. It helps in segregating cash flows obtained from the various activities of the business

6. It helps in providing decision about distribution of profit.

7. It is useful for short term financial analysis

4. What are the objectives of preparing cash flow statement?

Following are the objectives:

1. To determine inflow and outflow of cash and the cash equivalents obtained from the different kind of activities.

2. To seek out various reasons responsible for change in cash balances during the accounting period

3. It helps in depicting the position of the company in terms of liquidity and solvency

4. It also helps in determining the requirement and the corresponding availability of cash for business in future.

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

Cash equivalents are investments that are highly liquid in nature and do not change value easily. Cash equivalents are essential for managing short term cash requirements or any such investments. For example treasury bills.

Cash Flows: It is the inflow and outflow of cash and cash equivalents. Cash inflows boosts cash balance and cash outflow has a negative impact on cash balance

6. Prepare a format of cash flow from operating activities under indirect method.

The format is as follows:

NCERT ACT CLASS 12 Chp 6-1

7. State clearly what would constitute the operating activities for each of the following enterprises:

(i) Hotel

(ii) Film production house

(iii) Financial enterprise

(iv) Media enterprise

(v) Steel manufacturing unit

(vi) Software development business unit.

(i) Hotels

1. Receipts obtained from sale of goods to customers.

2. Customer stay, payments of wages and salaries, food items and electricity are operating activities

(ii) Film Production House:

1. Receipts obtained from selling of film rights to distributors

2. Payment provided to actor, actresses, directors and other employees.

(iii) Financial Enterprises:

1. Receipts obtained from loan repayments, interest received from investments

2. Salary for employees, expenditure incurred for recovering loans, loan repayment etc

(iv) Media Enterprises:

1. Receipts that are obtained from various advertisements

2. Payments made to photographers, employees and reporters

(v) Steel Manufacturing Unit:

1. Receipts obtained from sale of steel rods, castings and sheets.

2. Payments made for purchasing iron, coal and salaries to staff.

(vi) Software Development Business Unit:

1. Receipts obtained for software sales and license renewal

2. Payments towards salaries of employees

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

Yes, it can happen. For example, there are two firms one is engaged in real estate and the other in general business. For the firm engaged in real estate sale of building will be regarded as part of operating activity while for the firm dealing with general business, purchase or sale of a building is regarded as an investing activity. Therefore, it can be said that nature and type of enterprise determines the type of activities.

Long Questions for NCERT Accountancy Solutions Part 2 Class 12 Chapter 6

1. Describe the procedure to prepare Cash Flow Statement.

Following steps are followed:

1. Determine cash flows obtained from operating activities

2. Determine cash flows obtained from financing activities

3. Determine cash flow obtained from investing activities

4. Determine net increase or decrease which is obtained by adding amounts from all the cash flow activities.

5. Add the opening balance of cash and the cash equivalents and deduct the same from the amount determined in the previous step.

There are two methods which are used for preparation of cash flow statement

1. Direct Method

2. Indirect Method.

NCERT ACT CLASS 12 Chp 6-2

NCERT ACT CLASS 12 Chp 6-3

 2. Describe “Indirect” method of ascertaining Cash Flow from Operating Activities.

In indirect method cash flow statement begins with net income or loss, and thereafter the additions or deductions from that amount for non-cash expense and revenue items, which results in cash flow from operating activities. Following are some items:

1. Items that are non-cash in nature like goodwill, depreciation are added towards net profit

2. Expenses that are non-operating in nature like transfer to reserve and loss on sale of fixed assets which are added back to show Net Profit earned.

3. Provision such as discount for debtors, doubtful debts, proposed dividends etc. should be added to Net Profit

4. Any decrease in current assets and an increase in current liabilities is added to operating profit.

Following items get deducted from net profit of P & L account

1. Incomes that are non-operating in nature like sale of fixed assets

2. Non-trading incomes like dividend received, tax refund, interest received

3. Increase in current assets and decrease in current liabilities

NCERT ACT CLASS 12 Chp 6-4

 

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

Investing activities consist of sales and purchase of fixed assets that are long term in nature, like building, land, furniture and plant and machinery etc. It also includes sale and purchase of items that are not cash equivalents. If any income is received from these assets it is regarded as a part of investing activities. The major cash inflows and outflows that are involved in investing activities are:

1. Cash receipts that are obtained when fixed assets are sold off and it includes intangible assets.

2. Acquiring fixed assets which also includes intangibles like goodwill using cash payments, the payments is for the research and development and assets that are self-constructed.

3. Acquiring shares, debt instruments or warrants using cash payments

4. Disposal of shares and warrants that yield cash receipts.

5. Loans and cash advances that are made to third parties (does not includes loans and advances made by financial enterprises.

6. Cash receipts obtained from any insurance company for a property that is involved in accident

7. Cash receipts that are obtained for repayment of loans and cash advances made to third parties.

8. Any type of income that is obtained from fixed assets like interest, dividend and rent (not in case of financial enterprises) 

NCERT ACT CLASS 12 Chp 6-5

NCERT ACT CLASS 12 Chp 6-6

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

In a firm, the financing activities are associated with capital or long term funds of the firm, the financing activities bring about change in capital and borrowed funds.

The following cash inflows and outflows as per AS3 can be mentioned here as:

1. Cash received from the issuing of shares and similar instruments causes cash inflow

2. Cash received from issuing of debentures, obtaining loans, bonds and similar instruments brings cash inflow.

3. Repayments of debentures, loans and bonds in form of cash is considered cash outflow

4. Buying back shares and debentures which were issued is also cash outflow

5. Interest payment for debentures, advances and loans.

6. Dividend payment to equity and preference shareholders.

NCERT ACT CLASS 12 Chp 6-7

NCERT ACT CLASS 12 Chp 6-8

Numerical Questions for NCERT Accountancy Solutions Part 2 Class 12 Chapter 6

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

The solution for this question is as follows:

Cash Flow from Operating Activities as on March 31, 2017

Particulars

Amount

(₹)

Amount

(₹)

Net Profit during the year

 

5,00,000

Items to be adjusted:

 

 

 

Add: Depreciation

2,00,000

 

 

Less: Gain on sale of assets

(50,000)

1,50,000

Operating Profit before Working Capital changes

 

6,50,000

 

Add: Increase in Trade Payables

60,000

 

 

Less: Increase in Trade Receivables

(40,000)

20,000

Net Cash from Operations

 

6,70,000

 

 

 

2. From the information given below you are required to calculate the cash paid for the inventory:

 

Particulars

(₹)

Inventory in the beginning

40,000

Credit Purchases

1,60,000

Inventory in the end

38,000

Trade payables in the beginning

14,000

Trade payables in the end

14,500

The solution for this question is as follows:

Trade Payables Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

Cash (Balancing fig.)

 

1,59,500

 

Balance b/d

 

14,000

 

 Balance c/d

 

14,500

 

Purchases

 

1,60,000

 

 

 

1,74,000

 

 

 

1,74,000

 

 

 

 

 

 

 

 

 

Therefore the cash paid for Inventory amounts to ₹ 1, 59,500

3. 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 ₹ 2, 50,000 paying 20% by cheque and executing a bond for the balance payable.

(b) Paid ₹ 2, 50,000 to acquire shares in Informa Tech. and received a dividend of ₹ 50,000 after acquisition.

(c) Sold machinery of original cost ₹ 2, 00,000 with an accumulated depreciation of ₹ 1, 60,000 for ₹

60,000.

The solution for this question is as follows:

(a) 
NCERT ACT CLASS 12 Chp 6-9

Part payment ₹ 50,000 for acquiring machinery ₹ 2, 50,000 is related with Investing Activities

(b)

 

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 ₹ 60,000 on sale of machinery is a part Investing Activities.

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

 

Statement of Profit and Loss of Yamuna Ltd.,

for the Year ended March 31, 2017

Particulars

Note No.

Amount

(₹)

i)

Revenue from Operations

 

10,00,000

ii)

Expenses

 

 

 

Cost of Materials Consumed

1

50,000

 

Purchase of Stock-in-trade

 

5,00,000

 

Other Expenses

2

3,00,000

 

Total Expenses

 

8,50,000

iii)

Profit before Tax (i – ii)

 

1,50,000

 

Additional information:

(i) Trade receivables decrease by ₹ 30,000 during the year.

(ii) Prepaid expenses increase by ₹ 5,000 during the year.

(iii) Trade payables increase by ₹ 15,000 during the year.

(iv) Outstanding expenses payable increased by ₹ 3,000 during the year.

(v) Other expenses included depreciation of ₹ 25,000. 

Compute net cash from operations for the year ended March 31, 2017 by the indirect method.

The solution for this question is as follows:

Cash Flow from Operating Activities of Yamuna Limited as on March 31, 2017

Particulars

Amount

Amount

 

 

 

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

 

Less:

Decrease in Current Liabilities

 

 

 

 

Trade Creditors

(15,000)

 

 

Less:

Increase in Current Assets

 

 

 

 

Prepaid Expenses

(5,000)

(20,000)

Net Cash from Operations

 

2,38,000

 

 

 

5. Compute cash from operations from the following figures:

(i) Profit for the year 2016-17 is a sum of ₹. 10,000 after providing for depreciation of ₹. 2,000.

(ii) The current assets and current liabilities of the business for the year ended March 31, 2016 and 2015 are as follows:

Particular

March
31, 2016
(₹)

March
31, 2017
(₹)

Trade Receivables

14,000

15,000

Provision for Doubtful Debts

1,000

1,200

Trade Payables

13,000

15,000

Inventories

5,000

8,000

Other Current Assets

10,000

12,000

Expenses payable

1,000

1,500

Prepaid Expenses

2,000

1,000

Accrued Income

3,000

4,000

Income received in advance

2,000

1,000

The solution for this question is as follows:

Cash Flow Statement

for the Year Ending March 31, 2017

Particulars

Details

(₹)

Amount

(₹)

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)

 

Accrued Income

(2,000)

 

Other Current Assets

(3,000)

 

Inventories

 

 

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

 

 

Income received in advance

1,000

 

 

 

 

Net Cash From Operating Activities

 

7,700

 

 

 

6. 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  

Particulars

Note No.

Figures as the end of 2017
(₹)

Figures as at the
end of reporting 2016
(₹)

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 investments

3

3,60,000

2,60,000

 

Notes

1

Tangible assets = Machinery

 

2

Intangible assets = Patents

Notes

 

Figures of current year

Figures of previous 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

   

4,60,000

3,80,000

3. Non-current Investments  

   

   

10% long term investments  

1,60,000

60,000

Investment in land  

1,00,000

1,00,000

Shares of Amartex Ltd.  

1,00,000

1,00,000

   

3,60,000

2,60,000

   

   

   


Additional Information:

(a) Patents were written-off to the extent of ₹. 40,000 and some Patents were sold at a profit of ₹. 20,000.

(b) A Machine costing ₹. 1, 40,000 (Depreciation provided thereon ₹. 60,000) was sold for ₹. 50,000. Depreciation charged during the year was ₹. 1, 40,000.

(c) On March 31, 2016, 10% Investments were purchased for ₹. 1, 80,000 and some Investments were sold at a profit of ₹. 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 ₹. 30,000.

The solution for this question is as follows:

Cash Flow from Investing Activities

Particulars

Amount

Amount

Cash Inflow

 

 

 

Proceeds from Sale of Patents

1,00,000

 

 

Proceeds from Sale of Machinery

50,000

 

 

Proceeds from Sale of 10% Long-term Investment

1,00,000

 

 

Interest received on 10% Long-term Investment

6,000

 

 

Dividend Received from Amartax Ltd.

10,000

 

 

Rent Received

30,000

2,96,000

Cash Outflow

 

 

 

Purchase of Goodwill

(2,00,000)

 

 

Purchase of Machinery

(4,40,000)

 

 

Purchase of 10% Long-term Investment

(1,80,000)

(8,20,000)

Net Cash used in Investing Activities

 

(5,24,000)

 

 

 

 

 

 

 

 

 

 

 

Patents Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

Balance b/d

 

2,80,000

 

Profit and Loss (written off)

 

40,000

 

Profit and Loss  (Profit on sale)

 

20,000

 

Bank (sale- Balancing figure)

 

1,00,000

 

 

 

 

 

Balance c/d

 

1,60,000

 

 

 

3,00,000

 

 

 

3,00,000

 

 

 

 

 

 

 

 

 

Machinery Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

Balance b/d

 

10,20,000

 

Depreciation

 

1,40,000

 

Bank (Purchases- Balancing figure)

 

4,40,000

 

Bank

 

50,000

 

 

 

 

 

Profit and Loss

 

30,000

 

 

 

 

 

Balance c/d

 

12,40,000

 

 

 

14,60,000

 

 

 

14,60,000

 

 

 

 

 

 

 

 

 

10% Long-term Investment Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

Balance b/d

 

60,000

 

Bank  (Balancing figure)

 

1,00,000

 

Bank

 

1,80,000

 

 

 

 

 

Profit and Loss (Profit on sale)

 

20,000

 

Balance c/d

 

1,60,000

 

 

 

 

 

 

 

 

 

 

 

2,60,000

 

 

 

2,60,000

 

 

 

 

 

 

 

 

 

 

7. From the following Balance Sheet of Mohan Ltd., prepare cash flow Statement:
 

Balance Sheet of Mohan Ltd.,
as at 31st March 2016 and 31 March 2017

Particulars

Note No.

March 31, 2017
(₹)

March 31, 2016
(₹)

I) Equity and Liabilities

 

 

 

1. Shareholders’ Funds

 

 

 

a) Equity share capital

 

3,00,000

2,00,000

b) Reserves and surplus

 

2,00,000

1,60,000

2. Non-current liabilities

 

 

 

a) Long-term borrowings

1

 80,000

1,00,000

3. Current liabilities

 

 

 

Trade payables

 

1,20,000

1,40,000

Short-term provisions

2

70,000

60,000

Total

 

7,70,000

6,60,000

II) Assets

 

 

 

1. Non-current assets

 

 

 

Fixed assets

3

5,00,000

3,20,000

2. Current assets

 

 

 

a) Inventories

 

1,50,000

1,30,000

b) Trade receivables

4

90,000

1,20,000

c) Cash and cash equivalents

5

30,000

90,000

Total

 

 7,70,000

6,60,000

 

 

 

 

Notes to accounts:

 

2017

2016

1. Long-term borrowings

 

 

Bank Loan

80,000

1,00,000

2. Short-term provision

 

 

Proposed dividend

70,000

60,000

3. Fixed assets

6,00,000

4,00,000

Less: Accumulated Depreciation

1,00,000

80,000

(Net) Fixed Assets

5,00,000

3,20,000

4. Trade receivables

 

 

Debtors

60,000

1,00,000

Bills receivables

30,000

20,000

 

90,000

1,20,000

5. Cash and cash equivalents

 

 

Bank

30,000

90,000

 

 

 

Additional Information:

Machine Costing ₹. 80,000 on which accumulated depreciation was ₹. 50,000 was sold for ₹. 20,000.

The solution for this question is as follows:

Cash Flow Statement of Mohan Ltd.

 

Particulars

Amount

Amount

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

 

 

Add:

Decrease in Current Assets

 

 

 

 

 

Debtors

40,000

40,000

 

 

 

 

 

2,30,000

 

 

Less:

Increase in Current Assets

 

 

 

 

 

Inventories

(20,000)

 

 

 

 

Bills Receivable

(10,000)

 

 

 

Less:

Decrease in Current Liabilities

 

 

 

 

 

Trade Payables

(20,000)

(50,000)

 

Net Cash from Operations

 

1,80,000

B.

Cash Flow from Investing Activities

 

 

 

 

Proceeds from Sale of Fixed Assets

 

20,000

 

 

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)

 

 

Add:

Cash and Cash Equivalents in the beginning

 

90,000

 

 

 

 

E.

Cash and Cash equivalents at the end

 

30,000

 

 

 

 

 

Fixed Assets Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

Balance b/d

 

4,00,000

 

Bank

 

20,000

 

Bank (Purchases- Balancing fig.)

 

2,80,000

 

Profit and Loss

 

10,000

 

 

 

 

 

Accumulated Depreciation

 

50,000

 

 

 

 

 

Balance c/d

 

6,00,000

 

 

 

6,80,000

 

 

 

6,80,000

 

 

 

 

 

 

 

 

 

Accumulated Depreciation Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

Fixed Assets

 

50,000

 

Balance b/d

 

80,000

 

Balance c/d

 

1,00,000

 

Profit and Loss (Balance fig.)

 

70,000

 

 

 

1,50,000

 

 

 

1,50,000

 

 

 

 

 

 

 

 

8. From the following Balance Sheets of Tiger Super Steel Ltd., prepare Cash Flow Statement:

Balance Sheet of Tiger Super Steel Ltd.
as at 31st March 2014 and 31st March 2017

Particulars

Note No.

March 31, 2017
(₹)

March 31, 2016
(₹)

I) Equity and Liabilities

 

 

 

1. Shareholders’ Funds

 

 

 

a) Share capital

1

1,40,000

1,20,000

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

28,400

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

1,20,000

80,000

10% Preference share capital

20,000

40,000

 

1,40,000

1,20,000

2. Reserves and surplus

 

 

General reserve

12,000

8,000

Balance in statement of profit and loss

10,800

7,200

 

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

 

 

 


Additional Information:
Depreciation Charge on Land & Building ₹ 20,000, and Plant ₹ 10,000 during the year.

The solution for this question is as follows:

Cash Flow Statement of Tiger Super Steels Ltd

 

Particulars

Amount

Amount

A.

Cash Flow from Operating Activities

 

 

 

Profit as per the Balance Sheet (10,800 –7,200)

3,600

 

 

General Reserve

4,000

 

 

Proposed Dividend

15,600

 

 

Provision for Taxation

12,800

 

 

Net Profit before Taxation and Extraordinary

 

36,000

 

Items to be added:

 

 

 

 

Depreciation on Land and Building

20,000

 

 

 

Depreciation on Plant

10,000

 

 

 

Goodwill written off

5,200

35,200

 

Operating Profit before Working Capital changes

 

71,200

 

 

 

 

 

 

Add:

Increase in Current Liabilities

 

 

 

 

 

Bills Payable

7,200

 

 

 

Add:

Decrease in Current Assets

 

 

 

 

 

Inventories

2,800

10,000

 

 

 

 

 

81,200

 

 

Less:

Increase in Current Assets

 

 

 

 

 

Trade Receivables

(13,200)

 

 

 

Less:

Decrease in Current Liabilities

 

 

 

 

 

Outstanding Expenses

(800)

(14,000)

 

Cash Generated from Operating Activities

 

67,200

 

 

Less:

Income Tax paid

 

(11,200)

 

Net Cash from Operating Activities

 

56,000

 

 

 

 

 

 

B.

Cash Flow from Investing Activities

 

 

 

 

Purchases of Plant

 

(40,400)

 

 

Purchases of Investment

 

(20,000)

 

Net Cash used in Investing Activities

 

(60,400)

 

 

 

 

 

 

C.

Cash Flow from Financing Activities

 

 

 

 

Issue of Equity Shares

 

40,000

 

 

Dividend paid

 

(11,200)

 

 

Redemption of 10% Preference Shares

 

(20,000)

 

Net Cash from Financing Activities

 

8,800

 

 

 

 

 

 

D.

Net Increase in Cash and Cash Equivalent

 

4,400

 

 

Add:

Cash and Cash Equivalent in the beginning

 

6,800

E.

Cash and Cash Equivalents at the end

 

11,200

 

 

 

 

Working Notes:

1.

Plant Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

To Balance b/d

 

36,000

 

By Depreciation

 

10,000

 

To Bank A/c (Purchases- Balancing figure)

 

50,400

 

By Balance c/d

 

76,400

 

 

 

86,400

 

 

 

86,400

 

 

 

 

 

 

 

 

2.

Net Profit before Tax

3,600

Profit and Loss Account

12,800

Less:

Provision for Tax

16,400

 

 

 

9. From the following information, prepare cash flow statement:

 

Particulars

Note No.

31st March
2015
(₹)

31st March
2014
(₹)

I) Equity and Liabilities

 

 

 

1. Shareholders’ Funds

 

 

 

a) Share capital

 

7,00,000

5,00,000

b) Reserves and surplus

 

4,70,000

2,50,000

2. Non-current Liabilities

 

 

 

(8% Debentures)

 

4,00,000

6,00,000

3. Current Liabilities

 

 

 

a) Trade payables

 

9,00,000

6,00,000

Total

 

24,70,000

19,50,000

II) Assets

 

 

 

1. Non-current assets

 

 

 

a) Fixed assets

 

 

 

i) Tangible

 

7,00,000

5,00,000

ii) Intangible-Goodwill

 

1,70,000

2,50,000

2. Current assets

 

 

 

a) Inventories

 

6,00,000

5,00,000

b) Trade Receivables

 

6,00,000

4,00,000

c) Cash and cash equivalents

 

4,00,000

3,00,000

Total

 

 24,70,000

19,50,000

 

 

 

 

Additional Information:

Depreciation Charge on Plant amount to ₹. 80,000.

Cash Flow Statement

for the year ending March 31, 2015

 

Particulars

Details

(₹)

Amount

(₹)

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 Adjustments

 

4,28,000

 

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

 

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.

 

Cr.

Particulars

J.F.

Amount

(₹)

Particulars

J.F.

Amount

(₹)

Balance b/d

 

5,00,000

Depreciation

 

80,000

Purchases (Balancing Figure)

 

2,80,000

Balance c/d

 

7,00,000

 

 

 

 

 

 

 

 

7,80,000

 

 

7,80,000

 

 

 

 

 

 

 10. From the following Balance Sheet of Yogeta Ltd., prepare cash flow statement:

 

Particulars

Note No.

31st March
2017
(₹)

31st March
2016
(₹)

I) Equity and Liabilities

 

 

 

1. Shareholders’ Funds

 

 

 

a) Share capital

1

4,00,000

2,00,000

b) Reserves and surplus-Surplus

 

2,00,000

1,00,000

2. Non-current Liabilities

 

 

 

a) Long-term borrowings

2

1,50,000

2,20,000

3. Current Liabilities

 

 

 

a) Short-term borrowings

 

1,00,000

(Bank overdraft)

 

 

 

b) Trade payables

 

70,000

50,000

c) Short-term provision

 

50,000

30,000

(Provision for taxation)

 

 

 

Total

 

9,70,000

6,00,000

II) Assets

 

 

 

1. Non-current assets

 

 

 

a) Fixed assets

 

 

 

i) Tangible

 

7,00,000

4,00,000

2. Current assets

 

 

 

a) Inventories

 

1,70,000

1,00,000

b) Trade Receivables

 

1,00,000

50,000

c) Cash and cash equivalents

 

50,000

Total

 

 9,70,000

6,00,000

 

 

 

 

Notes to Accounts

Particulars

31st March
2017
(₹)

31st March
2016
(₹)

1. Share capital

 

 

a) Equity share capital

3,00,000

2,00,000

b) Preference share capital

1,00,000

 

4,00,000

2,00,000

2. Long term borrowings

 

 

Long-term loan

2,00,000

Long-term Rahul

1,50,000

20,000

 

1,50,000

2,20,000

 

 

 


Additional Information:
Net Profit for the year after charging ₹. 50,000 as Depreciation was ₹. 1, 50,000. Dividend paid on Share was ₹. 50,000, Tax Provision created during the year amounted to ₹. 60,000.

 The solution for this question is as follows:

Cash Flow Statement of Yogeta Ltd.

 

 

Particulars

Amount

Amount

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

 

 

 

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.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

Bank (Balancing figure)

 

40,000

 

Balance b/d

 

30,000

 

Balance c/d

 

50,000

 

Profit and Loss

 

60,000

 

 

 

90,000

 

 

 

90,000

 

 

 

 

 

 

 

 

 

2.

Fixed Assets Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

Balance b/d

 

4,00,000

 

Depreciation

 

50,000

 

Bank

 

3,50,000

 

Balance c/d

 

7,00,000

 

 

 

7,50,000

 

 

 

7,50,000

 

 

 

 

 

 

 

 

 

 

11. Following is the Financial Statement of Garima Ltd., prepare cash flow statement.

 

Particulars

Note No.

31st March
2017
(₹)

31st March
2016
(₹)

I) Equity and Liabilities

 

 

 

1. Shareholders’ Funds

 

 

 

a) Share capital

1

4,40,000

2,80,000

b) Reserve and surplus-Surplus

2

40,000

28,000

2. Current Liabilities

 

 

 

a) Trade payables

 

1,56,000

56,000

c) Short-term provisions

 

12,000

4,000

(Provision for taxation)

 

 

 

Total

 

6,48,000

3,68,000

II) Assets

 

 

 

1. Non-current assets

 

 

 

a) Fixed assets

 

 

 

i) Tangible

 

3,64,000

2,00,000

2. Current assets

 

 

 

a) Inventories

 

1,60,000

60,000

b) Trade receivables

 

80,000

20,000

c) Cash and cash equivalents

 

28,000

80,000

d) Other current assets

 

16,000

8,000

Total

 

 6,48,000

3,68,000

 

 

 

 

Notes to Accounts

Particulars

31st March
2017
(₹)

31st March
2016
(₹)

1. Share capital

 

 

a) Equity share capital

3,00,000

2,00,000

b) Preference share capital

1,40,000

80,000

 

4,40,000

2,80,000

2. Reserve and surplus

 

 

Surplus in statement of profit and loss at the beginning of the year

28,000

 

Add: Profit of the year

16,000

 

Less: Dividend

4,000

 

Profit at the end of the year

40,000

 

 

 

 

Additional Information:

  1. Interest paid on Debenture ₹ 600
  2. Dividend paid during the year ₹ 4,000
  3. Depreciation charged during the year ₹ 32,000

 The solution for this question is as follows:

Cash Flow Statement (Indirect Method)

 

Particulars

Amount

Amount

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 Capital changes

 

60,600

 

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 Activities

 

(7,400)

 

 

 

 

 

Less: Income Tax paid

 

(4,000)

 

Net Cash used in Operating Activities

 

(11,400)

 

 

 

 

 

 

B.

Cash Flow from Investing Activities

 

 

 

Purchase of Fixed Assets

 

(1,96,000)

 

Net Cash used in Investing Activities

 

(1,96,000)

 

 

 

 

 

 

C.

Cash Flow from Investing Activities

 

 

 

Issue of Equity Shares

 

1,00,000

 

Issue of Preference Shares

 

60,000

 

    Less: Interest Paid on Debentures

 

(600)

 

Less: Dividend Paid

 

(4,000)

 

Net Cash from Financing Activities

 

1,55,400

 

 

 

 

 

 

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.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

 

Balance b/d

 

2,00,000

 

Depreciation

 

32,000

 

Bank (Purchases- Balancing fig.)

 

1,96,000

 

Balance c/d

 

3,64,000

 

 

 

3,96,000

 

 

 

3,96,000

 

 

 

 

 

 

 

 

 

12. From the following Balance Sheet of Computer India Ltd., prepare cash flow statement.

(₹ in ‘000)

Particulars

Note No.

31st March
2017
(₹)

31st
March
2016
(₹)

I) Equity and Liabilities

 

 

 

1. Shareholders’ Funds

 

 

 

a) Share capital

 

50,000

40,000

b) Reserves and surplus-Surplus

1

3,700

3,000

2. Non-Current Liabilities

 

 

 

10% Debentures

 

6,500

6,000

3. Current Liabilities

 

 

 

a) Short-term borrowings

2

6,800

12,500

b) Trade payables

 

11,000

12,000

c) Short-term provisions

3

10,000

8,000

Total

 

88,000

81,500

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 equivalents-cash

 

3,500

1,200

d) Other current assets-prepaid exp.

 

500

300

Total

 

 88,000

81,500

 

 

 

 

Notes to Accounts

 

Particulars

31st March

2017

(₹)

31st
March

2016

(₹)

1.

Reserve and surplus

 

 

 

(i) Balance in statement of profit and loss

1,200

1,000

 

(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:

 

 

 

  Fixed Assets

40,000

41,000

 

  Less: Accumulated Depreciation

(15,000)

(11,000)

 

 

25,000

30,000

 

 

 

 

Additional Information:

Interest paid on Debenture ₹. 600

The solution for this question is as follows:

Cash Flow Statement of Computer India Ltd. 

 

 

(‘00,000)

 

Particulars

Amount

Amount

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

 

 

 

 

 

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)

Concepts covered in this chapter –

  • Nature of cash flow statement
  • Benefits of cash flow statement
  • Cash and cash equivalents
  • Cash flows
  • Preparation of cash flow statement

Conclusion

NCERT solutions for class 12 Accountancy chapter 6 provides a wide degree of illustrative examples; which assists the students to comprehend and learn quickly. The above mentioned are the illustrations for class 12 CBSE syllabus. For more solutions and study materials of NCERT solutions for class 12 Accountancy visit BYJU’S or download the app for more information.

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