NCERT Solutions is an extremely helpful resource to prepare well for the CBSE Class 12 Accountancy examinations. This study material provides students with a deep knowledge of the concepts, and the NCERT solutions designed by the subject-matter experts are easy to comprehend and clear their doubts instantly.
NCERT Solutions for Class 12 Accountancy Chapter 6 – Cash Flow Statement provides students with all-inclusive data on all the concepts and topics covered in the chapter. As the students have learnt the basics about the subject of Accountancy in Class 11, the NCERT Class 12 Solutions is a continual part of it; it explains the concepts in a detailed way.
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Short Questions for NCERT Accountancy Solutions Part 2 Class 12 Chapter 6
1. What is a cash flow statement?
A financial statement that represents the inflow and outflow of cash and cash equivalents of a company is called a cash flow statement. It shows how well a company can manage its cash position and generates enough cash to pay the obligations in the form of debt and also run the operational expenses.
2. How are the various activities classified (as per AS-3 revised) while preparing the cash flow statement?
Three types of activities are defined, and they are as follows:
1. Operating Activities
2. Financing Activities
3. Investing Activities
3. State the uses of the cash flow statement.
The following are the uses of the cash flow statement:
i. Useful for evaluating the cash position of a firm
ii. Helpful in finding deficiencies and variations in firms’ performance which helps in effective decision making
iii. It helps in the assessment of the liquidity of a company
iv. It analyses cash receipts and payments from the various activities of a company and helps in short-term planning
v. It helps in segregating cash flows obtained from the various activities of the business
vi. It helps in providing decisions about the distribution of profit.
vii. It is useful for short-term financial analysis
4. What are the objectives of preparing a cash flow statement?
The following are the objectives of preparing a cash flow statement:
i. To determine the inflow and outflow of cash and the cash equivalents obtained from different kinds of activities.
ii. To seek out various reasons responsible for the change in cash balances during the accounting period
iii. It helps in depicting the position of the company in terms of liquidity and solvency
iv. It also helps in determining the requirement and the corresponding availability of cash for business in future.
5. State the meaning of the terms: Cash Equivalents, Cash flows.
Cash equivalents are investments that are highly liquid in nature and do not change value easily. Cash equivalents are essential for managing short-term cash requirements or any such investments. For example, treasury bills.
Cash Flows: It is the inflow and outflow of cash and cash equivalents. Cash inflows boost cash balance, and cash outflow has a negative impact on cash balance
6. Prepare a format of cash flow from operating activities under the indirect method.
The format is as follows:
7. State clearly what would constitute the operating activities for each of the following enterprises:
(i) Hotel
(ii) Film production house
(iii) Financial enterprise
(iv) Media enterprise
(v) Steel manufacturing unit
(vi) Software development business unit.
(i) Hotel
1. Receipts obtained from the sale of goods to customers
2. Customer stay, payments of wages and salaries, food items, and electricity are operating activities
(ii) Film Production House:
1. Receipts obtained from the selling of film rights to distributors
2. Payment provided to actors, actresses, directors and other employees
(iii) Financial Enterprises:
1. Receipts obtained from loan repayments and interest received from investments
2. Salary for employees, expenditure incurred for recovering loans, loan repayment etc.
(iv) Media Enterprises:
1. Receipts that are obtained from various advertisements
2. Payments made to photographers, employees and reporters
(v) Steel Manufacturing Unit:
1. Receipts obtained from the sale of steel rods, castings and sheets
2. Payments made for purchasing iron, coal and salaries to staff
(vi) Software Development Business Unit:
1. Receipts obtained for software sales and license renewal
2. Payments towards salaries of employees
8. “The nature/type of enterprise can change altogether the category into which a particular activity may be classified.” Do you agree? Illustrate your answer.
Yes, it can happen. For example, there are two firms one is engaged in real estate and the other in general business. For the firm engaged in the real estate sale of a building will be regarded as part of the operating activity, while for the firm dealing with general business, the purchase or sale of a building is regarded as an investing activity. Therefore, it can be said that nature and type of enterprise determine the type of activities.
Long Questions for NCERT Accountancy Solutions Part 2 Class 12 Chapter 6
1. Describe the procedure to prepare a cash flow statement.
The following are the steps to prepare a cash flow statement:
i. Determine cash flows obtained from operating activities
ii. Determine cash flows obtained from financing activities
iii. Determine cash flow obtained from investing activities
iv. Determine net increase or decrease, which is obtained by adding amounts from all the cash flow activities.
5. Add the opening balance of cash and the cash equivalents and deduct the same from the amount determined in the previous step.
The two methods which are used for the preparation of a cash flow statement are listed below:
1. Direct Method
2. Indirect Method
2. Describe the “Indirect” method of ascertaining cash flow from operating activities.
In the indirect method, the cash flow statement begins with net income or loss and subsequently adds or deducts non-cash expenses and revenue items, which results in cash flow from operating activities. And they include the following:
i. Items that are non-cash in nature, like goodwill and depreciation, added towards net profit
ii. Expenses that are non-operating in nature, like transfer to reserve and loss on sale of fixed assets which are added back to show the net profit earned
iii. Provisions such as discounts for debtors, doubtful debts, proposed dividends etc., should be added to net profit
iv. Any decrease in current assets and an increase in current liabilities is added to operating profit
The following items get deducted from the net profit of the P & L account
i. Incomes that are non-operating in nature, like the sale of fixed assets
ii. Non-trading incomes like the dividend received, tax refund and interest received
iii. Increase in current assets and decrease in current liabilities
3. Explain the major Cash Inflow and outflows from investing activities.
Investing activities consist of sales and purchase of fixed assets that are long-term in nature, like the building, land, furniture and plant and machinery etc. It also includes the sale and purchase of items that are not cash equivalents. If any income is received from these assets, it is regarded as a part of investing activities. The major cash inflows and outflows that are involved in investing activities are as follows:
i. Cash receipts that are obtained when fixed assets are sold off, and it includes intangible assets
ii. Acquiring fixed assets which also includes intangibles like goodwill using cash payments; the payments are for the research and development and assets that are self-constructed
iii. Acquiring shares, debt instruments or warrants using cash payments
iv. Disposal of shares and warrants that yield cash receipts
v. Loans and cash advances that are made to third parties (does not includes loans and advances made by the financial enterprise
vi. Cash receipts obtained from any insurance company for a property that is involved in an accident
vii. Cash receipts that are obtained for repayment of loans and cash advances made to third parties
viii. Any type of income that is obtained from fixed assets like interest, dividend and rent (not in the case of financial enterprises)
4. Explain the major cash inflows and outflows from financing activities.
In a firm, the financing activities are associated with capital or long-term funds of the firm, and the financing activities bring about change in capital and borrowed funds.
The following cash inflows and outflows as per AS3 can be mentioned:
i. Cash received from the issuing of shares and similar instruments causes cash inflow
ii. Cash received from issuing of debentures, obtaining loans, bonds, and similar instruments brings cash inflow.
iii. Repayments of debentures, loans and bonds in the form of cash are considered cash outflow
iv. Buying back shares and debentures which were issued is also a cash outflow
v. Interest payment for debentures, advances and loans
vi. Dividend payment to equity and preference shareholders
Numerical Questions for NCERT Solutions Accountancy Part 2 Class 12 Chapter 6
1. Anand Ltd. arrived at a net income of ₹ 5, 00,000 for the year ended March 31, 2017. Depreciation for the year was ₹ 2,00,000. There was a profit of ₹ 50,000 on assets sold, which was transferred to the statement of profit and loss account. Trade Receivables increased during the year ₹ 40,000, and trade payables also increased by ₹ 60,000. Compute the cash flow operating activities by the indirect approach.
The solution to this question is as follows:
| Cash Flow from Operating Activities as on March 31, 2017 | |||
| Particulars | Amount
(₹) |
Amount
(₹) |
|
| Net Profit during the year | 5,00,000 | ||
| Items to be adjusted: | |||
| Add: Depreciation | 2,00,000 | ||
| Less: Gain on sale of assets | (50,000) | 1,50,000 | |
| Operating Profit before Working Capital changes | 6,50,000 | ||
| Add: Increase in Trade Payables | 60,000 | ||
| Less: Increase in Trade Receivables | (40,000) | 20,000 | |
| Net Cash from Operations | 6,70,000 | ||
2. From the information given below, you are required to calculate the cash paid for the inventory:
| Particulars | (₹) |
| Inventory in the beginning | 40,000 |
| Credit Purchases | 1,60,000 |
| Inventory at the end | 38,000 |
| Trade payables in the beginning | 14,000 |
| Trade payables at the end | 14,500 |
The solution to this question is as follows:
| Trade Payables Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| Cash (Balancing fig.) | 1,59,500 | Balance b/d | 14,000 | ||||
| Balance c/d | 14,500 | Purchases | 1,60,000 | ||||
| 1,74,000 | 1,74,000 | ||||||
Therefore the cash paid for Inventory amounts to ₹ 1, 59,500.
3. For each of the following transactions, calculate the resulting cash flow and state the nature of cash flow, viz., operating, investing and financing.
(a) Acquired machinery for ₹ 2,50,000, paying 20% by cheque and executing a bond for the balance payable.
(b) Paid ₹ 2,50,000 to acquire shares in Informa Tech. and received a dividend of ₹ 50,000 after the acquisition.
(c) Sold machinery of original cost ₹ 2,00,000 with an accumulated depreciation of ₹ 1,60,000 for ₹
60,000.
The solution to this question is as follows:
(a)
Part-payment of ₹ 50,000 for acquiring machinery and ₹ 2,50,000 is related to investing activities.
(b)
| ₹ | |
| Amount paid for acquiring shares | (2,50,000) |
| Dividend received | 50,000 |
| Net cash used in investing activities | (2,00,000) |
Amount paid to acquire assets and dividends received is a part of investing activities.
(c) Inflow of cash of ₹ 60,000 on the sale of machinery is a part of investing activities.
4. The following is the profit and loss account of Yamuna Limited:
| Statement of Profit and Loss of Yamuna Ltd.,
for the Year Ended March 31, 2017 |
|||
| Particulars | Note No. | Amount
(₹) |
|
| i) | Revenue from Operations | 10,00,000 | |
| ii) | Expenses | ||
| Cost of Materials Consumed | 1 | 50,000 | |
| Purchase of Stock-in-trade | 5,00,000 | ||
| Other Expenses | 2 | 3,00,000 | |
| Total Expenses | 8,50,000 | ||
| iii) | Profit before Tax (i – ii) | 1,50,000 | |
Additional information:
(i) Trade receivables decrease by ₹ 30,000 during the year.
(ii) Prepaid expenses increase by ₹ 5,000 during the year.
(iii) Trade payables increase by ₹ 15,000 during the year.
(iv) Outstanding expenses payable increased by ₹ 3,000 during the year.
(v) Other expenses included depreciation of ₹ 25,000.
Compute net cash from operations for the year ended March 31, 2017, by the indirect method.
The solution to this question is as follows:
| Cash Flow from Operating Activities of Yamuna Limited as on March 31, 2017 | ||||
| Particulars | Amount
₹ |
Amount
₹ |
||
| Net Profit earned during the year | 1,50,000 | |||
| Items to be added: | ||||
| Depreciation | 25,000 | |||
| Operating Profit before Working Capital changes | 1,75,000 | |||
| Add: | Increase in Current Liabilities | |||
| Outstanding Expenses | 3,000 | |||
| Add: | Decrease in Current Assets | |||
| Trade Receivables | 30,000 | |||
| Stock | 50,000 | 83,000 | ||
| Less: | Decrease in Current Liabilities | |||
| Trade Creditors | (15,000) | |||
| Less: | Increase in Current Assets | |||
| Prepaid Expenses | (5,000) | (20,000) | ||
| Net Cash from Operations | 2,38,000 | |||
5. Compute cash from operations from the following figures:
(i) Profit for the year 2016-17 is a sum of ₹ 10,000 after providing for depreciation of ₹ 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 (₹) |
March 31, 2017 (₹) |
| 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 |
The solution to this question is as follows:
| 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 | |
6. From the following particulars of Bharat Gas Limited, calculate cash flows from investing activities. Also, show the workings clearly preparing the ledger accounts:
| Balance Sheet of Bharat Gas Ltd. as on 31 Mar. 2016 and 31 Mar. 2017 | |||
| Particulars | Note No. | Figures as the end of 2017 (₹) |
Figures as at the end of reporting 2016 (₹) |
| II) Assets | |||
| 1. Non-current Assets | |||
| a) Fixed assets | |||
| i) Tangible assets | 1 | 12,40,000 | 10,20,000 |
| ii) Intangible assets | 2 | 4,60,000 | 3,80,000 |
| b) Non-current investments | 3 | 3,60,000 | 2,60,000 |
| Notes | 1 | Tangible assets = Machinery |
| 2 | Intangible assets = Patents |
Notes
| Figures of the current year | Figures of the previous year | |
| 1. Tangible Assets | ||
| Machinery | 12,40,000 | 10,20,000 |
| 2. Intangible Assets | ||
| Goodwill | 3,00,000 | 1,00,000 |
| Patents | 1,60,000 | 2,80,000 |
| 4,60,000 | 3,80,000 | |
| 3. Non-current Investments | ||
| 10% long-term investments | 1,60,000 | 60,000 |
| Investment in land | 1,00,000 | 1,00,000 |
| Shares of Amartex Ltd. | 1,00,000 | 1,00,000 |
| 3,60,000 | 2,60,000 | |
Additional Information:
(a) Patents were written off to the extent of ₹. 40,000, and some patents were sold at a profit of ₹. 20,000.
(b) A machine costing ₹ 1,40,000 (Depreciation provided thereon ₹ 60,000) was sold for ₹ 50,000. Depreciation charged during the year was ₹ 1,40,000.
(c) On March 31, 2016, 10% of investments were purchased for ₹ 1,80,000, and some investments were sold at a profit of ₹ 20,000. Interest on investment was received on March 31, 2017.
(d) Amartax Ltd. paid dividends @ 10% on its shares.
(e) A plot of land had been purchased for investment purposes and let out for commercial use, and rent received ₹ 30,000.
The solution to this question is as follows:
| Cash Flow from Investing Activities | ||||
| Particulars | Amount
₹ |
Amount
₹ |
||
| Cash Inflow | ||||
| Proceeds from Sale of Patents | 1,00,000 | |||
| Proceeds from Sale of Machinery | 50,000 | |||
| Proceeds from Sale of 10% Long-term Investment | 1,00,000 | |||
| Interest received on 10% Long-term Investment | 6,000 | |||
| Dividend Received from Amartax Ltd. | 10,000 | |||
| Rent Received | 30,000 | 2,96,000 | ||
| Cash Outflow | ||||
| Purchase of Goodwill | (2,00,000) | |||
| Purchase of Machinery | (4,40,000) | |||
| Purchase of 10% Long-term Investment | (1,80,000) | (8,20,000) | ||
| Net Cash used in Investing Activities | (5,24,000) | |||
| Patents Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| Balance b/d | 2,80,000 | Profit and Loss (written off) | 40,000 | ||||
| Profit and Loss (Profit on sale) | 20,000 | Bank (sale- Balancing figure) | 1,00,000 | ||||
| Balance c/d | 1,60,000 | ||||||
| 3,00,000 | 3,00,000 | ||||||
| Machinery Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| Balance b/d | 10,20,000 | Depreciation | 1,40,000 | ||||
| Bank (Purchases- Balancing figure) | 4,40,000 | Bank | 50,000 | ||||
| Profit and Loss | 30,000 | ||||||
| Balance c/d | 12,40,000 | ||||||
| 14,60,000 | 14,60,000 | ||||||
| 10% Long-term Investment Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| Balance b/d | 60,000 | Bank (Balancing figure) | 1,00,000 | ||||
| Bank | 1,80,000 | ||||||
| Profit and Loss (Profit on sale) | 20,000 | Balance c/d | 1,60,000 | ||||
| 2,60,000 | 2,60,000 | ||||||
7. From the following Balance Sheet of Mohan Ltd., prepare the cash flow Statement.
| Balance Sheet of Mohan Ltd., as on 31st March 2016 and 31 March 2017 |
|||
| Particulars | Note No. | March 31, 2017 (₹) |
March 31, 2016 (₹) |
| I) Equity and Liabilities | |||
| 1. Shareholders’ Funds | |||
| a) Equity share capital | 3,00,000 | 2,00,000 | |
| b) Reserves and surplus | 2,00,000 | 1,60,000 | |
| 2. Non-current liabilities | |||
| a) Long-term borrowings | 1 | 80,000 | 1,00,000 |
| 3. Current liabilities | |||
| Trade payables | 1,20,000 | 1,40,000 | |
| Short-term provisions | 2 | 70,000 | 60,000 |
| Total | 7,70,000 | 6,60,000 | |
| II) Assets | |||
| 1. Non-current assets | |||
| Fixed assets | 3 | 5,00,000 | 3,20,000 |
| 2. Current assets | |||
| a) Inventories | 1,50,000 | 1,30,000 | |
| b) Trade receivables | 4 | 90,000 | 1,20,000 |
| c) Cash and cash equivalents | 5 | 30,000 | 90,000 |
| Total | 7,70,000 | 6,60,000 | |
Notes to accounts:
| 2017 | 2016 | |
| 1. Long-term borrowings | ||
| Bank Loan | 80,000 | 1,00,000 |
| 2. Short-term provision | ||
| Proposed dividend | 70,000 | 60,000 |
| 3. Fixed assets | 6,00,000 | 4,00,000 |
| Less: Accumulated Depreciation | 1,00,000 | 80,000 |
| (Net) Fixed Assets | 5,00,000 | 3,20,000 |
| 4. Trade receivables | ||
| Debtors | 60,000 | 1,00,000 |
| Bills receivables | 30,000 | 20,000 |
| 90,000 | 1,20,000 | |
| 5. Cash and cash equivalents | ||
| Bank | 30,000 | 90,000 |
Additional Information:
Machine Costing ₹ 80,000 on which accumulated depreciation was ₹ 50,000 was sold for ₹ 20,000.
The solution to this question is as follows:
| Cash Flow Statement of Mohan Ltd. | |||||
| Particulars | Amount
₹ |
Amount
₹ |
|||
| A. | Cash Flow from Operating Activities | ||||
| Profit as per the Balance Sheet (2,00,000 – 1,60,000) | 40,000 | ||||
| Proposed Dividend | 70,000 | ||||
| Net Profit before Taxation and Extraordinary items | 1,10,000 | ||||
| Adjustments: | |||||
| Depreciation | 70,000 | ||||
| Loss on Sale of Machine | 10,000 | 80,000 | |||
| Operating Profit before Working Capital changes | 1,90,000 | ||||
| Add: | Decrease in Current Assets | ||||
| Debtors | 40,000 | 40,000 | |||
| 2,30,000 | |||||
| Less: | Increase in Current Assets | ||||
| Inventories | (20,000) | ||||
| Bills Receivable | (10,000) | ||||
| Less: | Decrease in Current Liabilities | ||||
| Trade Payables | (20,000) | (50,000) | |||
| Net Cash from Operations | 1,80,000 | ||||
| B. | Cash Flow from Investing Activities | ||||
| Proceeds from Sale of Fixed Assets | 20,000 | ||||
| Purchases of Fixed Assets | (2,80,000) | ||||
| Net Cash Outflow from Investing Activity | (2,60,000) | ||||
| C. | Cash Flow from Financing Activities | ||||
| Issue of Shares | 1,00,000 | ||||
| Bank Loan Paid | (20,000) | ||||
| Dividend Paid | (60,000) | ||||
| Net Cash from Financing Activities | 20,000 | ||||
| D. | Net Decrease in Cash and Cash Equivalents (A+B+C) | (60,000) | |||
| Add: | Cash and Cash Equivalents in the beginning | 90,000 | |||
| E. | Cash and Cash equivalents at the end | 30,000 | |||
| Fixed Assets Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| Balance b/d | 4,00,000 | Bank | 20,000 | ||||
| Bank (Purchases- Balancing fig.) | 2,80,000 | Profit and Loss | 10,000 | ||||
| Accumulated Depreciation | 50,000 | ||||||
| Balance c/d | 6,00,000 | ||||||
| 6,80,000 | 6,80,000 | ||||||
| Accumulated Depreciation Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| Fixed Assets | 50,000 | Balance b/d | 80,000 | ||||
| Balance c/d | 1,00,000 | Profit and Loss (Balance fig.) | 70,000 | ||||
| 1,50,000 | 1,50,000 | ||||||
8. From the following balance sheets of Tiger Super Steel Ltd., prepare the cash flow statement:
| Balance Sheet of Tiger Super Steel Ltd. as at 31st March 2014 and 31st March 2017 |
|||
| Particulars | Note No. | March 31, 2017 (₹) |
March 31, 2016 (₹) |
| I) Equity and Liabilities | |||
| 1. Shareholders’ Funds | |||
| a) Share capital | 1 | 1,40,000 | 1,20,000 |
| b) Reserves and surplus | 2 | 22,800 | 15,200 |
| 2. Current Liabilities | |||
| a) Trade payables | 3 | 21,200 | 14,000 |
| b) Other current liabilities | 4 | 2,400 | 3,200 |
| c) Short-term provisions | 5 | 28,400 | 22,400 |
| Total | 2,14,800 | 1,74,800 | |
| II) Assets | |||
| 1. Non-Current Assets | |||
| a) Fixed assets | |||
| i) Tangible assets | 6 | 96,400 | 76,000 |
| ii) Intangible assets | 18,800 | 24,000 | |
| b) Non-current investments | 14,000 | 4,000 | |
| 2. Current Assets | |||
| a) Inventories | 31,200 | 34,000 | |
| b) Trade receivables | 43,200 | 30,000 | |
| c) Cash and Cash Equivalents | 11,200 | 6,800 | |
| Total | 2,14,800 | 1,74,800 | |
Notes to accounts:
| 2017 | 2016 | |
| 1. Share Capital | ||
| Equity share capital | 1,20,000 | 80,000 |
| 10% Preference share capital | 20,000 | 40,000 |
| 1,40,000 | 1,20,000 | |
| 2. Reserves and surplus | ||
| General reserve | 12,000 | 8,000 |
| Balance in the statement of profit and loss | 10,800 | 7,200 |
| 22,800 | 15,200 | |
| 3. Trade payables | ||
| Bills payable | 21,200 | 14,000 |
| 4. Other current liabilities | ||
| Outstanding expenses | 2,400 | 3,200 |
| 5. Short-term provisions | ||
| Provision for taxation | 12,800 | 11,200 |
| Proposed dividend | 15,600 | 11,200 |
| 28,400 | 22,400 | |
| 6. Tangible assets | ||
| Land and building | 20,000 | 40,000 |
| Plant | 76,400 | 36,000 |
| 96,400 | 76,000 | |
Additional Information:
Depreciation Charge on land & building ₹ 20,000, and Plant ₹ 10,000 during the year.
The solution to this question is as follows:
| Cash Flow Statement of Tiger Super Steels Ltd | |||||
| Particulars | Amount
₹ |
Amount
₹ |
|||
| A. | Cash Flow from Operating Activities | ||||
| Profit as per the Balance Sheet (10,800 –7,200) | 3,600 | ||||
| General Reserve | 4,000 | ||||
| Proposed Dividend | 15,600 | ||||
| Provision for Taxation | 12,800 | ||||
| Net Profit before Taxation and Extraordinary | 36,000 | ||||
| Items to be added: | |||||
| Depreciation on Land and Building | 20,000 | ||||
| Depreciation on Plant | 10,000 | ||||
| Goodwill written off | 5,200 | 35,200 | |||
| Operating Profit before Working Capital changes | 71,200 | ||||
| Add: | Increase in Current Liabilities | ||||
| Bills Payable | 7,200 | ||||
| Add: | Decrease in Current Assets | ||||
| Inventories | 2,800 | 10,000 | |||
| 81,200 | |||||
| Less: | Increase in Current Assets | ||||
| Trade Receivables | (13,200) | ||||
| Less: | Decrease in Current Liabilities | ||||
| Outstanding Expenses | (800) | (14,000) | |||
| Cash Generated from Operating Activities | 67,200 | ||||
| Less: | Income Tax paid | (11,200) | |||
| Net Cash from Operating Activities | 56,000 | ||||
| B. | Cash Flow from Investing Activities | ||||
| Purchases of Plant | (40,400) | ||||
| Purchases of Investment | (20,000) | ||||
| Net Cash used in Investing Activities | (60,400) | ||||
| C. | Cash Flow from Financing Activities | ||||
| Issue of Equity Shares | 40,000 | ||||
| Dividend paid | (11,200) | ||||
| Redemption of 10% Preference Shares | (20,000) | ||||
| Net Cash from Financing Activities | 8,800 | ||||
| D. | Net Increase in Cash and Cash Equivalent | 4,400 | |||
| Add: | Cash and Cash Equivalent in the beginning | 6,800 | |||
| E. | Cash and Cash Equivalents at the end | 11,200 | |||
Working Notes:
1.
| Plant Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| To Balance b/d | 36,000 | By Depreciation | 10,000 | ||||
| To Bank A/c (Purchases- Balancing figure) | 50,400 | By Balance c/d | 76,400 | ||||
| 86,400 | 86,400 | ||||||
2.
| Net Profit before Tax | 3,600 | |
| Profit and Loss Account | 12,800 | |
| Less: | Provision for Tax | 16,400 |
9. From the following information, prepare a cash flow statement.
| Particulars | Note No. | 31st March 2015 (₹) |
31st March 2014 (₹) |
| I) Equity and Liabilities | |||
| 1. Shareholders’ Funds | |||
| a) Share capital | 7,00,000 | 5,00,000 | |
| b) Reserves and surplus | 4,70,000 | 2,50,000 | |
| 2. Non-current Liabilities | |||
| (8% Debentures) | 4,00,000 | 6,00,000 | |
| 3. Current Liabilities | |||
| a) Trade payables | 9,00,000 | 6,00,000 | |
| Total | 24,70,000 | 19,50,000 | |
| II) Assets | |||
| 1. Non-current assets | |||
| a) Fixed assets | |||
| i) Tangible | 7,00,000 | 5,00,000 | |
| ii) Intangible-Goodwill | 1,70,000 | 2,50,000 | |
| 2. Current assets | |||
| a) Inventories | 6,00,000 | 5,00,000 | |
| b) Trade Receivables | 6,00,000 | 4,00,000 | |
| c) Cash and cash equivalents | 4,00,000 | 3,00,000 | |
| Total | 24,70,000 | 19,50,000 | |
Additional Information:
Depreciation Charge on the plant amount to ₹ 80,000.
| Cash Flow Statement
for the year ending March 31, 2015 |
|||
| Particulars | Details
(₹) |
Amount
(₹) |
|
| A. | Cash from Operating Activities | ||
| Net Profit | 2,20,000 | ||
| Items to be Added: | |||
| Interest on Debentures | 48,000 | ||
| Depreciation on Fixed Assets | 80,000 | ||
| Goodwill Written-off | 80,000 | 2,08,000 | |
| Operating Profit before Working Capital Adjustments | 4,28,000 | ||
| Add: Increase in Current Liabilities | |||
| Creditors | 3,00,000 | ||
| Less: Increase in Current Assets | |||
| Inventories | (1,00,000) | ||
| Trade Receivables | (2,00,000) | – | |
| Cash Generated from Operations | 4,28,000 | ||
| Less: Tax Paid | – | ||
| Net Cash From Operating Activities | 4,28,000 | ||
| B. | Cash From Investing Activities | ||
| Purchase of Fixed Assets (WN) | (2,80,000) | ||
| Net Cash From Investing Activities | (2,80,000) | ||
| C. | Cash From Financing Activities | ||
| Issue of Share Capital | 2,00,000 | ||
| Redemption of Debentures | (2,00,000) | ||
| Interest Paid on Debentures | (48,000) | (48,000) | |
| Net Cash From Financing Activities (C) | (48,000) | ||
| Net Increase in Cash (A + B + C) | 1,00,000 | ||
| Add: Opening Cash and Cash Equivalents | 3,00,000 | ||
| Closing Cash and Cash Equivalents | 4,00,000 | ||
Working Note:
| Fixed Assets Account | |||||||
| Dr. | Cr. | ||||||
| Particulars | J.F. | Amount
(₹) |
Particulars | J.F. | Amount
(₹) |
||
| Balance b/d | 5,00,000 | Depreciation | 80,000 | ||||
| Purchases (Balancing Figure) | 2,80,000 | Balance c/d | 7,00,000 | ||||
| 7,80,000 | 7,80,000 | ||||||
10. From the following balance sheet of Yogeta Ltd., prepare the cash flow statement.
| Particulars | Note No. | 31st March 2017 (₹) |
31st March 2016 (₹) |
| I) Equity and Liabilities | |||
| 1. Shareholders’ Funds | |||
| a) Share capital | 1 | 4,00,000 | 2,00,000 |
| b) Reserves and surplus-Surplus | 2,00,000 | 1,00,000 | |
| 2. Non-current Liabilities | |||
| a) Long-term borrowings | 2 | 1,50,000 | 2,20,000 |
| 3. Current Liabilities | |||
| a) Short-term borrowings | 1,00,000 | – | |
| (Bank overdraft) | |||
| b) Trade payables | 70,000 | 50,000 | |
| c) Short-term provision | 50,000 | 30,000 | |
| (Provision for taxation) | |||
| Total | 9,70,000 | 6,00,000 | |
| II) Assets | |||
| 1. Non-current assets | |||
| a) Fixed assets | |||
| i) Tangible | 7,00,000 | 4,00,000 | |
| 2. Current assets | |||
| a) Inventories | 1,70,000 | 1,00,000 | |
| b) Trade Receivables | 1,00,000 | 50,000 | |
| c) Cash and cash equivalents | – | 50,000 | |
| Total | 9,70,000 | 6,00,000 | |
Notes to Accounts
| Particulars | 31st March 2017 (₹) |
31st March 2016 (₹) |
| 1. Share capital | ||
| a) Equity share capital | 3,00,000 | 2,00,000 |
| b) Preference share capital | 1,00,000 | – |
| 4,00,000 | 2,00,000 | |
| 2. Long-term borrowings | ||
| Long-term loan | – | 2,00,000 |
| Long-term Rahul | 1,50,000 | 20,000 |
| 1,50,000 | 2,20,000 | |
Additional Information:
Net Profit for the year after charging ₹ 50,000 as depreciation was ₹ 1,50,000. The dividend paid on shares was ₹ 50,000, Tax Provision created during the year amounted to ₹ 60,000.
The solution to this question is as follows:
| Cash Flow Statement of Yogeta Ltd. | |||||
| Particulars | Amount
₹ |
Amount
₹ |
|||
| A. | Cash Flow from Operating Activities | ||||
| Profit as per Balance Sheet (2,00,000 –1,00,000) | 1,00,000 | ||||
| Proposed Dividend | 50,000 | ||||
| Provision for Taxation | 60,000 | ||||
| Net Profit before Taxation and Extraordinary items | 2,10,000 | ||||
| Items to be added: | |||||
| Depreciation | 50,000 | 50,000 | |||
| Operating Profit before Working Capital changes | 2,60,000 | ||||
| Add: Increase in Current liabilities | |||||
| Trade Payable | 20,000 | 20,000 | |||
| 2,80,000 | |||||
| Less: Increase in Current Assets | |||||
| Inventories | (70,000) | ||||
| Trade Receivable | (50,000) | (1,20,000) | |||
| Cash Generated from Operating Activities | 1,60,000 | ||||
| Less: Income Tax paid | (40,000) | ||||
| Net Cash from Operations | 1,20,000 | ||||
| B. | Cash Flow from Investing Activities | ||||
| Purchases of Fixed Assets | (3,50,000) | ||||
| Net Cash used in Investing Activities | (3,50,000) | ||||
| C. | Cash Flow from Financing Activities | ||||
| Issue of Equity Shares | 1,00,000 | ||||
| Issue of Preference Shares | 1,00,000 | ||||
| Loan from Rahul | 1,30,000 | ||||
| Less: Repayment of Loan | (2,00,000) | ||||
| Dividend Paid | (50,000) | ||||
| Net Cash from Financing Activities | 80,000 | ||||
| D. | Net decrease in Cash and Cash Equivalent (A+B+C) | (1,50,000) | |||
| Add: Cash and Cash Equivalents in the beginning | 50,000 | ||||
| E. | Cash and Cash Equivalents at the end (Bank Overdraft) | (1,00,000) | |||
Working Notes:
1.
| Provision for Taxation Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| Bank (Balancing figure) | 40,000 | Balance b/d | 30,000 | ||||
| Balance c/d | 50,000 | Profit and Loss | 60,000 | ||||
| 90,000 | 90,000 | ||||||
2.
| Fixed Assets Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| Balance b/d | 4,00,000 | Depreciation | 50,000 | ||||
| Bank | 3,50,000 | Balance c/d | 7,00,000 | ||||
| 7,50,000 | 7,50,000 | ||||||
11. Following is the financial statement of Garima Ltd. Prepare the cash flow statement.
| Particulars | Note No. | 31st March 2017 (₹) |
31st March 2016 (₹) |
| I) Equity and Liabilities | |||
| 1. Shareholders’ Funds | |||
| a) Share capital | 1 | 4,40,000 | 2,80,000 |
| b) Reserve and surplus-Surplus | 2 | 40,000 | 28,000 |
| 2. Current Liabilities | |||
| a) Trade payables | 1,56,000 | 56,000 | |
| c) Short-term provisions | 12,000 | 4,000 | |
| (Provision for taxation) | |||
| Total | 6,48,000 | 3,68,000 | |
| II) Assets | |||
| 1. Non-current assets | |||
| a) Fixed assets | |||
| i) Tangible | 3,64,000 | 2,00,000 | |
| 2. Current assets | |||
| a) Inventories | 1,60,000 | 60,000 | |
| b) Trade receivables | 80,000 | 20,000 | |
| c) Cash and cash equivalents | 28,000 | 80,000 | |
| d) Other current assets | 16,000 | 8,000 | |
| Total | 6,48,000 | 3,68,000 | |
Notes to Accounts
| Particulars | 31st March 2017 (₹) |
31st March 2016 (₹) |
| 1. Share capital | ||
| a) Equity share capital | 3,00,000 | 2,00,000 |
| b) Preference share capital | 1,40,000 | 80,000 |
| 4,40,000 | 2,80,000 | |
| 2. Reserve and surplus | ||
| Surplus in statement of profit and loss at the beginning of the year | 28,000 | |
| Add: Profit of the year | 16,000 | |
| Less: Dividend | 4,000 | |
| Profit at the end of the year | 40,000 | |
Additional Information:
- Interest paid on debenture ₹ 600
- Dividend paid during the year ₹ 4,000
- Depreciation charged during the year ₹ 32,000
The solution to this question is as follows:
| Cash Flow Statement (Indirect Method) | |||||
| Particulars | Amount
₹ |
Amount
₹ |
|||
| A. | Cash Flow from Operating Activities | ||||
| Profit as per Balance Sheet (40,000 – 28,000) | 12,000 | ||||
| Proposed Dividend | 4,000 | ||||
| Provision for Taxation | 12,000 | ||||
| Net Profit before Taxation and Extraordinary items | 28,000 | ||||
| Items to be added: | |||||
| Interest paid on Debentures | 600 | ||||
| Depreciation | 32,000 | 32,600 | |||
| Operating Profit before Working Capital changes | 60,600 | ||||
| Add: Increase in Current liabilities | |||||
| Trade Payables | 1,00,000 | ||||
| Less: Increase in Current Assets | |||||
| Other Current Assets | (8,000) | ||||
| Inventories | (1,00,000) | ||||
| Trade Receivables | (60,000) | (68,000) | |||
| Cash generated from Operating Activities | (7,400) | ||||
| Less: Income Tax paid | (4,000) | ||||
| Net Cash used in Operating Activities | (11,400) | ||||
| B. | Cash Flow from Investing Activities | ||||
| Purchase of Fixed Assets | (1,96,000) | ||||
| Net Cash used in Investing Activities | (1,96,000) | ||||
| C. | Cash Flow from Investing Activities | ||||
| Issue of Equity Shares | 1,00,000 | ||||
| Issue of Preference Shares | 60,000 | ||||
| Less: Interest Paid on Debentures | (600) | ||||
| Less: Dividend Paid | (4,000) | ||||
| Net Cash from Financing Activities | 1,55,400 | ||||
| D. | Net decrease in cash and cash equivalent (A+B+C) | (52,000) | |||
| Add: Cash and Cash Equivalents in the beginning | 80,000 | ||||
| E. | Cash and Cash Equivalents at the end | 28,000 | |||
Working Notes:
| Plant and Machinery Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| Balance b/d | 2,00,000 | Depreciation | 32,000 | ||||
| Bank (Purchases- Balancing fig.) | 1,96,000 | Balance c/d | 3,64,000 | ||||
| 3,96,000 | 3,96,000 | ||||||
12. From the following balance sheet of Computer India Ltd., prepare a cash flow statement.
| (₹ in ‘000) | |||
| Particulars | Note No. | 31st March 2017 (₹) |
31st March 2016 (₹) |
| I) Equity and Liabilities | |||
| 1. Shareholders’ Funds | |||
| a) Share capital | 50,000 | 40,000 | |
| b) Reserves and surplus-Surplus | 1 | 3,700 | 3,000 |
| 2. Non-Current Liabilities | |||
| 10% Debentures | 6,500 | 6,000 | |
| 3. Current Liabilities | |||
| a) Short-term borrowings | 2 | 6,800 | 12,500 |
| b) Trade payables | 11,000 | 12,000 | |
| c) Short-term provisions | 3 | 10,000 | 8,000 |
| Total | 88,000 | 81,500 | |
| II) Assets | |||
| 1. Non-current assets | |||
| a) Fixed assets | 4 | 25,000 | 30,000 |
| 2. Current assets | |||
| a) Inventories | 35,000 | 30,000 | |
| b) Trade receivables | 24,000 | 20,000 | |
| c) Cash and cash equivalents-cash | 3,500 | 1,200 | |
| d) Other current assets-prepaid exp. | 500 | 300 | |
| Total | 88,000 | 81,500 | |
Notes to Accounts
| Particulars | 31st March
2017 (₹) |
31st March2016(₹) |
|
| 1. | Reserve and surplus | ||
| (i) Balance in the statement of profit and loss | 1,200 | 1,000 | |
| (ii) General reserve | 2,500 | 2,000 | |
| 3,700 | 3,000 | ||
| 2. | Short-term borrowings | ||
| Bank Overdraft | 6,800 | 12,500 | |
| 3. | Short-term provisions | ||
| (i) Provision for taxation | 4,200 | 3,000 | |
| (ii) Proposed dividend | 5,800 | 5,000 | |
| 10,000 | 8,000 | ||
| 4. | Fixed Assets: | ||
| Fixed Assets | 40,000 | 41,000 | |
| Less: Accumulated Depreciation | (15,000) | (11,000) | |
| 25,000 | 30,000 | ||
Additional Information:
Interest paid on Debenture ₹ 600
The solution to this question is as follows:
| Cash Flow Statement of Computer India Ltd. | |||||
| (‘00,000) | |||||
| Particulars | Amount
₹ |
Amount
₹ |
|||
| A. | Cash Flow from Operating Activities | ||||
| Profit as per Balance Sheet (1,200 – 1,000) | 200 | ||||
| Proposed Dividend | 5,800 | ||||
| General Reserve | 500 | ||||
| Provision for Taxation | 4,200 | ||||
| Net Profit before Tax and Extraordinary items | 10,700 | ||||
| Items to be added | |||||
| Provision for Depreciation | 4,000 | ||||
| Interest paid on Debentures | 600 | 4,600 | |||
| Operating Profit before Working Capital changes | 15,300 | ||||
| Adjustments | |||||
| Less: | Increase in Current Assets | ||||
| Trade Receivables | (4,000) | ||||
| Inventories | (5,000) | ||||
| Prepaid Expenses | (200) | (9,200) | |||
| 6,100 | |||||
| Less: | Decrease in Current Liabilities | ||||
| Trade Creditors | (1,000) | (1,000) | |||
| Cash generated from Operating Activities | 5,100 | ||||
| Less: | Income Tax Paid | (3,000) | |||
| Net Cash from Operation | 2,100 | ||||
| B. | Cash Flow from Investing Activities | ||||
| Sale of Fixed Assets | 1,000 | ||||
| Net Cash from Investing Activities | 1,000 | ||||
| C. | Cash Flow from Financing Activities | ||||
| Issue of Equity Shares | 10,000 | ||||
| Issue of 10% Debentures | 500 | ||||
| Less: | Dividend paid | (5,000) | |||
| Less: | Interest paid | (600) | |||
| Net Cash from Financing Activities | 4,900 | ||||
| D. | Net Increase in Cash and Cash Equivalent (A+B+C) | 8,000 | |||
| Add: | Cash and Cash Equivalent in the beginning | ||||
| Cash | 1,200 | ||||
| Bank Overdraft | (12,500) | (11,300) | |||
| E. | Cash and Cash Equivalents at the end | ||||
| Cash | 3,500 | ||||
| Bank Overdraft | (6,800) | (3,300) | |||
The concepts covered in this chapter are listed below:
- Nature of the cash flow statement
- Benefits of cash flow statement
- Cash and cash equivalents
- Cash flows
- Preparation of cash flow statement
Conclusion
NCERT Solutions for Class 12 Accountancy Chapter 6 provides a wide range of illustrative examples, which assists the students in comprehending the concepts and learning quickly. The above-mentioned are the solutions according to the Class 12 CBSE syllabus. For more solutions and study materials of NCERT solutions for Class 12 Accountancy, visit BYJU’S or download BYJU’S – The Learning App for more information.
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