Question

Calculate Cash Flow from Operating Activities from the following:

(i) Profit form the year is ₹ 7,00,000 after considering the following items:

Particulars	(₹)
Depreciation on Fixed Assets	40,000
Goodwill Amortised	20,000
Gain on Sale of Land	90,000
Appropriation of Profit towards General Reserve	60,000

(ii) Following is the position of Current Assets and Current Liabiliites

Particulars	Closing Balance (₹)	Opening Balance (₹)
Trade Payables	50,000	75,000
Trade Receivables	75,000	60,000
Prepaid Expenses	10,000	18,000

Answer 1

Cash Flow from Operating Activities
	Particulars	Amount (Rs)	Amount (Rs.)
	Profit as per Statement of Profit and Loss		7,00,000
	Add: Transfer to General Reserve		60,000
	Profit Before Tax and Extraordinary items		7,60,000
	Items to be Added:
	Depreciation on Fixed Asset	40,000
	Goodwill Amortised	20,000	60,000
			8,20,000
	Items to be Deducted:
	Gain on Sale of land	(90,000)	(90,000)
	Operating Profit before Working Capital Adjustments		7,30,000
	Add:Decrease in Prepaid Expenses	8,000	8,000
			7,38,000
	Less: Decrease in Trade Payables	(25,000)
	Less: Increase in Trade Receivables	(15,000)	(40,000)
	Net Cash Flows from Operating Activities		6,98,000