Question

Compute cash from operations from the following figures
(i) Profit for the year 2010-11 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, 2010 and 2011 are as follows:
$\begin{array}{ccc}\text{Particulars}& \text{March 31, 2010}& \text{March 31, 2010}\\ & \text{(Rs.)}& \text{(Rs.)}\\ \text{Debtors}& 10,000& 12,000\\ \text{Provision for Doubtful Debts}& 1,000& 1,200\\ \text{Bills Receivable}& 4,000& 3,000\\ \text{Bills Payable}& 5,000& 6,000\\ \text{Creditors}& 8,000& 9,000\\ \text{Inventories}& 5,000& 8,000\\ \text{Short Term Investments}& 10,000& 12,000\\ \text{Outstanding Expenses}& 1,000& 1,500\\ \text{Prepaid Expenses}& 2,000& 1,000\\ \text{Accrued Income}& 3,000& 4,000\\ \text{Income Received in Advance}& 2,000& 1,000\end{array}$
Prepare of cash flow statement from summary cash account.

Answer 1

Cash Flow from Operating Activities
as on March 31, 2010
$\begin{array}{ccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Amt. (Rs.)}\\ \text{Net Profit for the Year 2010-11}& & 10,000\\ \text{Adjustment for non-cash items:}& & \\ \text{Depreciation}& & \underset{–}{2,000}\\ \text{Operationg Profit before Working Capital Changes}& & 12,000\\ \text{Changes in Working Capital:}& & \\ \text{(+) Increase in Provision for Doubtful Debts}& 200& \\ \text{(+) Increase in Bills Payable}& 1,000& \\ \text{(+) Increase in Creditors}& 1,000& \\ \text{(+) Increase in Outstanding Expenses}& 500& \\ \text{(+) Decrease in Bills Receivable}& 1,000& \\ \text{(+) Decrease in Prepaid Expenses}& \text{1,000}& \\ \text{(-) Increase in Debtors}& (2,000)& \\ \text{(-) Increase in Inventories}& (3,000)& \\ \text{(-) Increase in Short Term Investments}& (2,000)& \\ \text{(-) Increase in Accrued Income}& (1,000)& \\ \text{(-) Decrease in Income Received in Advance}& \underset{–}{(1,000)}& \underset{–}{(4,300)}\\ \text{Net Cash from Operations}& & \underset{–}{7,700}\end{array}$