Question

Compute cash from operations from the following figures:

(i) Profit for the year 2005-06 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, 2006 and 2007 are as follows:

	March	March
	31, 2006	31, 2007
	Rs	Rs
Debtors	10,000	12,000
Provision for Doubtful Debts	1,000	1,200
Bills Receivables	4,000	3,000
Bills Payables	5,000	6,000
Creditors	8,000	9,000
Inventories	5,000	8,000
Short-term Investments	10,000	12,000
Outstanding Expenses	1,000	1,500
Prepaid Expenses	2,000	1,000
Accrued Income	3,000	4,000
Income received in advance	2,000	1,000

Answer 1

Cash Flow from Operating Activities as on March 31, 2006
Particulars					Amount Rs	Amount Rs
Net Profit for the year 2005-06						10,000
Items to be added:
	Depreciation					2,000
Operating Profit before Working Capital changes						12,000
	Add:		Increase in Current Liabilities
			Provision for Doubtful Debts		200
			Bills Payable		1,000
			Creditors		1,000
			Outstanding Expenses		500
	Add:		Decrease in Current Assets
			Bills Receivable		1,000
			Prepaid Expenses		1,000	4,700
	Less:		Increase in Current Assets
			Debtors		(2,000)
			Inventories		(3,000)
			Short-term Investments		(2,000)
			Accrued Income		(1,000)
	Less:		Decrease in Current Liabilities
			Income received in advance		(1,000)	(9,000)
Net Cash from Operations						7,700