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AE for Expenses

When do you a...

Question

When do you add proposed dividend as an increase/decrease in current liability in cash flow statement?

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Solution

When the balance of Proposed Dividend is given in the Balance Sheet, in that case, the balance of previous year is shown as Cash Outflow under Financing Activities and the balance of current year is added to Net Profit before Taxation and Extraordinary Items under Operating Activities.

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Q. The accountant of 'Nav Jeevan Limited' while preparing Cash Flow Statement added the proposed dividend of the current year to net profit while calculating cash flow from operating activities. Was he correct in doing so ? Give reason.

Q. On an accounting statement of cash flows an "increases(decrease) in cash and cash equivalent" appears as ________________.

Q. Calculate Cash Flow from Operating Activities from the following information.

Particular	31^st March 2017 (Rs)
Net Profit (Difference between Closing and Opening Balance of Surplus, i.e., Balance in Statement of Profit and Loss)	8,00,000
Final Dividend paid in the year	1,10,000
Compensation for Natural Disaster credited to Statement of Profit and Loss	75,000
Depreciation	1,50,000
Loss on Sale of Investment	30,000
Gain (Profit) on Sale of Land	90,000
Provision for Tax	1,10,000
Dividend Received	20,000
Decrease in Current Assets (Other than Cash and Cash Equivalents)	40,000
Increase in Current Liablilities	70,000
Decrease in Current Liabilities	10,000
Increase in Current Assets (Other than Cash and Cash Equivalents)	60,000
Income Tax Refund	10,000
Income Tax Paid	1,20,000

If current liabilities reduces, we _______ the value in cash flow statement

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