Question of 46
Q.
Following are the summarised Balance Sheets of V. Ltd. Prepare a Cash Flow Statement for the year ended 31st December, 2017 (As per AS-3).
BALANCE SHEETS OF V. LTD. as on 31st December, 2016 and 31st December, 2017
| Liabilities | 31st Dec., 2016 (₹) | 31st Dec., 2017 (₹) | Assets | 31st Dec., 2016 (₹) | 31st Dec., 2017 (₹) |
|---|---|---|---|---|---|
| Share Capital | 45,000 | 65,000 | Goodwill | 30,000 | 20,000 |
| General Reserve | 15,000 | 27,500 | Fixed Assets | 46,000 | 83,500 |
| Profit and Loss A/c | 10,000 | 15,000 | Stock | 11,000 | 13,000 |
| Creditors | 15,000 | 13,000 | Debtors | 18,000 | 19,000 |
| Bank Overdraft | 15,000 | 25,000 | Bills Receivable | 10,000 | 25,000 |
| Bills Payable | 8,000 | 11,000 | Cash in Hand | 3,000 | 1,000 |
| Proposed Dividend | 10,000 | 5,000 | |||
| 1,18,000 | 1,61,500 | 1,18,000 | 1,61,500 |
Or
What is Cash Flow Statement? Mention the limitations of Cash Flow Statement.
West Bengal WbchseWBCHSE West Bengal HS (Class-12) Commerce Board 2018Subjective· 6mImportance★★★★★
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Start your 14-day free trial to unlock the full solution →Operating cash flow = 15,500; Investing = (37,500) for fixed assets purchased; Financing = +20,000 (shares 20,000 + overdraft 10,000 − dividend 10,000). Net decrease in cash = 2,000 (3,000 → 1,000).
Workings
- Net profit before tax = increase in P&L 5,000 + transfer to General Reserve 12,500 + current year's proposed dividend 5,000 = 22,500.
- Goodwill written off = 30,000 − 20,000 = 10,000 (non-cash, added back).
- Fixed assets purchased = 83,500 − 46,000 = 37,500.
- Previous year's proposed dividend 10,000 paid during the year (financing outflow).
- Bank overdraft increase 25,000 − 15,000 = 10,000 treated as short-term borrowing (financing inflow); cash & cash equivalents = Cash in Hand only.
Cash Flow Statement of V Ltd. for the year ended 31st December, 2017 (AS-3)
| Particulars | ₹ | ₹ |
|---|---|---|
| A. Operating Activities | ||
| Net profit before tax | 22,500 | |
| Add: Goodwill written off | 10,000 | |
| Operating profit before working capital changes | 32,500 | |
| Less: Increase in Stock | (2,000) | |
| Less: Increase in Debtors | (1,000) | |
| Less: Increase in Bills Receivable | (15,000) | |
| Less: Decrease in Creditors | (2,000) | |
| Add: Increase in Bills Payable | 3,000 | (17,000) |
| Net cash from Operating Activities | 15,500 | |
| B. Investing Activities | ||
| Purchase of Fixed Assets | (37,500) | |
| Net cash used in Investing Activities | (37,500) | |
| C. Financing Activities | ||
| Issue of Share Capital | 20,000 | |
| Increase in Bank Overdraft | 10,000 | |
| Dividend paid | (10,000) | |
| Net cash from Financing Activities | 20,000 | |
| Net decrease in Cash (A+B+C) | (2,000) | |
| Add: Opening Cash in Hand | 3,000 | |
| Closing Cash in Hand | 1,000 | |
| … |
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