From the following information of Vidhi Company Ltd., calculate cash flow from operating activities :

| Particulars | Amount (₹) |
|---|---|
| Profit before taxes | 1,30,000 |
| Goodwill written off | 30,000 |
| Patent amortized | 18,000 |
| Depreciation written off | 30,000 |
|

Question

From the following information of Vidhi Company Ltd., calculate cash flow from operating activities :

| Particulars | Amount (₹) |
|---|---|
| Profit before taxes | 1,30,000 |
| Goodwill written off | 30,000 |
| Patent amortized | 18,000 |
| Depreciation written off | 30,000 |
| Interest paid | 15,000 |
| Dividend paid | 20,000 |
| Profit on sale of investments | 15,000 |
| Loss on sale of furniture | 20,000 |
| Transfer to General Reserve | 25,000 |
| Interest received | 15,000 |
| Dividend received | 10,000 |

OR

From the following information of RAOL Co. Ltd., determine cash flow from investing activities:

| Particulars | Amount (₹) |
|---|---|
| Opening balance of machines | 9,00,000 |
| Closing balance of machines | 8,00,000 |
| Book value of machine sold during the year | 50,000 |
| Depreciation provided on machines | 1,00,000 |
| Selling price of machines | 30,000 |

Accepted Answer

>

> [!TLDR]
> Part 1: adjusting profit before tax ₹ 1,30,000 for non-cash and non-operating items gives cash flow from operating activities of ₹ 2,03,000. Part 2: cash used in investing activities is ₹ 20,000. Both sides of the GSEB Class-12 Commerce OR are solved.
>
> **Part 1 — Cash Flow from Operating Activities (Vidhi Company Ltd.), indirect method:**
>
> | Particulars | ₹ | ₹ |
> |---|---|---|
> | Profit before taxes | | 1,30,000 |
> | Add: Non-cash / non-operating items: | | |
> |   Goodwill written off | 30,000 | |
> |   Patent amortized | 18,000 | |
> |   Depreciation written off | 30,000 | |
> |   Loss on sale of furniture | 20,000 | |
> |   Interest paid (financing) | 15,000 | 1,13,000 |
> | | | 2,43,000 |
> | Less: Non-operating incomes: | | |
> |   Profit on sale of investments | 15,000 | |
> |   Interest received (investing) | 15,000 | |
> |   Dividend received (investing) | 10,000 | (40,000) |
> | Cash flow from operating activities | | 2,03,000 |
>
> Note: Transfer to General Reserve (₹ 25,000) and Dividend paid (₹ 20,000) are appropriations/financing items, not adjusted here. No tax paid or working-capital changes are given.
>
> **Part 2 (OR) — Cash Flow from Investing Activities (RAOL Co. Ltd.):**
>
> First find machinery purchased using the Machinery Account:
>
> | Machinery Account | ₹ |
> |---|---|
> | Opening balance | 9,00,000 |
> | Add: Purchases (balancing figure) | 50,000 |
> | Less: Depreciation | (1,00,000) |
> | Less: Book value of machine sold | (50,000) | …

Activity	What it includes	Example
Operating Activities	Main revenue-producing activities	Cash from selling goods, cash paid to suppliers, salaries
Investing Activities	Purchase/sale of long-term assets	Buying machinery, selling land, loans given
Financing Activities	Changes in equity and borrowings	Issue of shares, repayment of bank loan, dividend paid

Particulars	Amount (₹)
A. Cash Flow from Operating Activities
Net Profit before Tax (from P&L)	1,00,000
Adjustments for non-cash items:
Add: Depreciation	20,000
Add: Loss on sale of asset	5,000
Less: Profit on sale of asset	(3,000)
Changes in Working Capital:
Increase in Debtors	(10,000)
Decrease in Stock	8,000
Increase in Creditors	6,000
Net Cash from Operating Activities	1,26,000
B. Cash Flow from Investing Activities
Purchase of Machinery	(50,000)
Sale of Land	30,000
Net Cash used in Investing Activities	(20,000)
C. Cash Flow from Financing Activities
Issue of Share Capital	40,000
Repayment of Loan	(15,000)
Dividend Paid	(10,000)

Item	2020 (Rs.)	2021 (Rs.)	Change	Effect on cash (Rs.)
Debtors	20,000	15,000	Decrease 5,000	+5,000
Creditors	10,000	8,000	Decrease 2,000	−2,000
Bills Receivable	6,000	8,000	Increase 2,000	−2,000
Prepaid expenses	8,000	7,000	Decrease 1,000	+1,000
Net change in working capital				+2,000

Concept understanding — Cash Flow Calculation

Cash Flow: From Pocket Money to the Cash Flow Statement

Why Cash Flow Matters

The Three Activities of Cash Flow

Accounting Treatment — No Debit/Credit Here

The Proforma of a Cash Flow Statement (as per NCERT)

Particulars	Amount (₹)
Profit before taxes	1,30,000
Goodwill written off	30,000
Patent amortized	18,000
Depreciation written off	30,000
Interest paid	15,000
Dividend paid	20,000
Profit on sale of investments	15,000
Loss on sale of furniture	20,000
Transfer to General Reserve	25,000
Interest received	15,000
Dividend received	10,000

Particulars	Amount (₹)
Opening balance of machines	9,00,000
Closing balance of machines	8,00,000
Book value of machine sold during the year	50,000
Depreciation provided on machines	1,00,000
Selling price of machines	30,000

Particulars	₹	₹
Profit before taxes		1,30,000
Add: Non-cash / non-operating items:
Goodwill written off	30,000
Patent amortized	18,000
Depreciation written off	30,000
Loss on sale of furniture	20,000
Interest paid (financing)	15,000	1,13,000
		2,43,000
Less: Non-operating incomes:
Profit on sale of investments	15,000
Interest received (investing)	15,000
Dividend received (investing)	10,000	(40,000)
Cash flow from operating activities		2,03,000

Machinery Account	₹
Opening balance	9,00,000
Add: Purchases (balancing figure)	50,000
Less: Depreciation	(1,00,000)
Less: Book value of machine sold	(50,000)

Particulars	₹
Net profit (after transfer to general reserve)	75,000
Add: Transfer to General Reserve (appropriation)	15,000

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