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Question

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 and current liabilities of the business for the year ended March 31, 2016 and 2015 are as follows:

Particular March
31, 2016
(Rs)
March
31, 2017
(Rs)
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

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Solution

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


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