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Preparation of Cash Flow Statement
There are two methods to prepare cash flow statement; they are:
(1) Direct method
(2) Indirect method
Both methods have three activities; they are:
(a) Operating activities
(b) Investing activities
(c) Financing activities
Keep in Mind (KIM)
Only operating activities are the difference between direct methods and indirect methods. |
Investing activities and financing activities are the same in both methods. |
EXAM BASED PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1
The balance sheets of A Company Ltd as on 31st December are as follows:
Liabilities |
Year 1 |
Year 2 |
Assets |
Year 1 |
Year 2 |
Equity shares capital |
5,00,000 |
6,00,000 |
Fixed assets |
6,00,000 |
8,00,000 |
Share premium |
50,000 |
60,000 |
Inventory |
50,000 |
1,00,000 |
Retained earning |
1,00,000 |
1,50,000 |
Account receivable |
1,50,000 |
1,00,000 |
10% Debentures |
1,00,000 |
50,000 |
Cash at bank |
1,00,000 |
50,000 |
Bill payable |
50,000 |
40,000 |
|
|
|
Account payable |
1,00,000 |
1,50,000 |
|
|
|
|
9,00,000 |
10,50,000 |
|
9,00,000 |
10,50,000 |
Additional information for Year 2:
Sales for year Rs 6,00,000
Cost of goods sold Rs 3,50,000
Operating expenses Rs 1,00,000
Fixed assets costing Rs 20,000 sold for Rs 30,000
Fixed assets purchased for Rs 3,00,000
Dividend distributed Rs 20,000
Debentures were redeemed with Rs 10,000 premium
Required: Cash flow statement by showing:
(A) Cash from operating activities; (B) Cash from investing activities
(C) Cash from financing activities; (D) Net change in cash and cash equivalent
[Answer: OA = 1,90,000; IA = (2,70,000); FA =30,000;
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2
The balance sheet of A company Ltd as on 31st December are as follows:
Liabilities |
2019 |
2020 |
Assets |
2019 |
2020 |
Equity shares capital |
7,50,000 |
9,00,000 |
Plant and machinery |
8,00,000 |
11,40,000 |
Share premium |
75,000 |
90,000 |
Investment |
1,00,000 |
60,000 |
Retained earning |
1,50,000 |
2,25,000 |
Inventories |
75,000 |
1,50,000 |
8% Debentures |
1,50,000 |
75,000 |
Debtors |
2,21,000 |
1,48,000 |
Creditors |
2,10,000 |
2,73,000 |
Prepaid expenses |
4,000 |
2,000 |
Outstanding expenses |
15,000 |
12,000 |
Cash and bank |
1,50,000 |
75,000 |
|
13,50,000 |
15,75,000 |
|
13,50,000 |
15,75,000 |
Additional information for 2020:
1. Sales for year Rs 9,00,000.
2. Cost of goods sold Rs 5,20,000.
3. Administrative expenses Rs 1,25,000.
4. Selling and distribution expenses Rs 25,000.
5. Investment costing of Rs 40,000 was sold at a profit of Rs 15,000.
6. Purchased plant and machinery of Rs 4,65,000 (depreciation Rs 1,25,000)
7. Dividend distributed Rs 45,000
Required: Cash flow statement by showing:
(A) Cash from operating activities; (B) Cash from investing activities
(C) Cash from financing activities; (D) Net change in cash and cash equivalent
[Answer: OA = Rs 2,90,000; IA = (Rs 4,10,000); FA = Rs 45,000;
*Depn on plant and machinery = Rs 1,25,000
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#####
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3
The balance sheets of AV Company Ltd as on 31st March are as follows:
Liabilities |
Year 1 |
Year 2 |
Assets |
Year 1 |
Year 2 |
Equity shares capital |
160,000 |
240,000 |
Fixed assets |
222,000 |
410,000 |
Share premium |
20,000 |
30,000 |
Debtors |
80,000 |
120,000 |
Retained earning |
80,000 |
100,000 |
Inventory |
120,000 |
90,000 |
8% Debentures |
– |
80,000 |
Insurance prepaid |
8,000 |
4,000 |
Creditors |
100,000 |
70,000 |
Cash in hand |
40,000 |
50,000 |
Overdraft |
60,000 |
40,000 |
|
|
|
Provision for tax |
40,000 |
100,000 |
|
|
|
Outstanding expenses |
10,000 |
14,000 |
|
|
|
|
470,000 |
674,000 |
|
470,000 |
674,000 |
Additional information:
1. Sales for year Rs 16,00,000
2. Cost of goods sold Rs 11,20,000
3. Operating expenses Rs 2,76,000
4. Tax paid Rs 40,000
5. Sales of fixed assets Rs 72,000
6. Purchase of fixed assets Rs 3,12,000
7. Dividend distributed Rs 32,000
Required: Cash flow statement by showing:
(A) Cash from operating activities; (B) Cash from investing activities
(C) Cash from financing activities; (D) Net change in cash and cash equivalent
[Answer: OA = 112,000; IA = (240,000); FA =138,000; *Tax paid is given
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 4
The balance sheets of AV Company Ltd as on 31st March are as follows:
Liabilities |
Year 1 |
Year 2 |
Assets |
Year 1 |
Year 2 |
Equity shares capital |
450,000 |
720,000 |
Fixed assets |
350,000 |
600,000 |
10% Debentures |
100,000 |
40,000 |
Account receivable |
40,000 |
25,000 |
Account payable |
40,000 |
50,000 |
Inventories |
100,000 |
150,000 |
Retained earning |
10,000 |
80,000 |
Cash balance |
100,000 |
110,000 |
|
|
|
Goodwill |
10,000 |
5,000 |
|
600,000 |
890,000 |
|
600,000 |
890,000 |
Additional information for the year 2:
a |
Sales for Rs 625,000 |
b |
Cost of goods sold Rs 300,000 |
c |
Operating expenses Rs 150,000 (including depreciation on fixed assets Rs 80,000 and interest on debentures Rs 10,000) |
d |
Gain on sales of fixed assets (book value Rs 50,000) Rs 5,000 |
e |
Purchased of fixed assets Rs 380,000 |
f |
Dividend paid Rs 105,000 |
Required: Cash Flow Statement by using direct method
[Answer: CFOA = Rs 2,30,000; CFIA = (Rs 325,000); CFFA = Rs 105,000;
Operating expenses = Rs 60,000; *Sales of fixed assets = Rs 55,000
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5
The balance sheet of BC Company Ltd are as follows:
Liabilities |
Year 1 |
Year 2 |
Assets |
Year 1 |
Year 2 |
Equity shares capital |
5,00,000 |
6,00,000 |
Fixed assets |
5,00,000 |
7,00,000 |
Bank loan |
1,00,000 |
50,000 |
Stock |
40,000 |
80,000 |
Creditors |
1,50,000 |
2,00,000 |
Debtors |
2,10,000 |
1,70,000 |
Retained earning |
1,00,000 |
1,50,000 |
Cash |
1,00,000 |
50,000 |
|
8,50,000 |
10,00,000 |
|
8,50,000 |
10,00,000 |
Additional information:
Sales and cost of goods sold for the year were Rs 7,00,000 and Rs 4,40,000 respectively.
Operating expenses were Rs 1,00,000.
Purchase of fixed assets Rs 3,20,000 and a part of fixed assets was sold for Rs 70,000.
Dividend paid for the year Rs 60,000.
Required: Cash flow statement by using direct method
[Answer: CFOA = Rs 2,10,000; CFIA = (Rs 2,50,000); CFFA = (Rs 10,000);
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 6
The balance sheets of AK Limited Company as on 31st March are given below:
Liabilities |
Year 1 |
Year 2 |
Assets |
Year 1 |
Year 2 |
Equity shares capital |
7,50,000 |
9,00,000 |
Fixed assets |
7,50,000 |
10,50,000 |
8% debentures |
1,50,000 |
75,000 |
Inventory |
60,000 |
1,20,000 |
Retained earning |
1,50,000 |
2,25,000 |
Sundry debtors |
3,15,000 |
2,55,000 |
Sundry creditors |
1,50,000 |
2,00,000 |
Bank and cash balance |
1,50,000 |
75,000 |
Outstanding expenses |
75,000 |
1,00,000 |
|
|
|
|
12,75,000 |
15,00,000 |
|
12,75,000 |
15,00,000 |
Additional information for the year 2:
Sales income Rs 10,50,000
Cost of goods sold Rs 6,60,000
Administrative expenses Rs 1,50,000
Purchased fixed assets Rs 4,80,000
Fixed assets sold Rs 1,05,000
Dividend distributed for the year Rs 90,000
Required: Cash flow statement by using direct method
[Answer: CFOA = Rs 3,15,000; CFIA (Rs 3,75,000); CFFA = (Rs 15,000);
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 7
The balance sheet of AZ Company Ltd as on 31st March are as follows:
Liabilities |
Year X4 |
Year X5 |
Assets |
Year X4 |
Year X5 |
Share capital |
1,60,000 |
2,40,000 |
Fixed assets |
2,22,000 |
4,10,000 |
Share premium |
20,000 |
30,000 |
Debtors |
80,000 |
1,20,000 |
Retained earning |
80,000 |
1,00,000 |
Inventory |
1,20,000 |
90,000 |
10% debenture |
— |
80,000 |
Insurance prepaid |
8,000 |
4,000 |
Creditors |
1,00,000 |
70,000 |
Cash in hand |
40,000 |
50,000 |
Overdraft |
60,000 |
40,000 |
|
|
|
Provision for tax |
40,000 |
1,00,000 |
|
|
|
Outstanding expenses |
10,000 |
14,000 |
|
|
|
|
4,70,000 |
6,74,000 |
|
4,70,000 |
6,74,000 |
Additional information:
Sales Rs 16,00,000 |
Sale of fixed assets Rs 72,000 |
Cost of goods sold Rs 11,20,000 |
Purchsed of fixed assets Rs 3,12,000 |
Operating expenses Rs 2,76,000 |
Dividend distribution Rs 32,000 |
Tax paid Rs 40,000 |
|
required: Cash flow statement by using direct method
[Answer: CFOA = Rs 1,12,000; CFIA = (Rs 2,40,000); CFFA = Rs 1,38,000;
*Inflow of insurance = Rs 4,000; No entry for provision tax.
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 8
The comparative balance sheets of AP Company Ltd as on 31st March are as follows:
Liabilities |
2019 |
2020 |
Assets |
2019 |
2020 |
Share capital |
375,000 |
450,000 |
Machinery |
400,000 |
570,000 |
Share premium |
37,500 |
45,000 |
Furniture |
50,000 |
30,000 |
Loan |
75,000 |
37,500 |
Stock |
37,500 |
75,000 |
Wages due |
7,500 |
6,000 |
Debtors |
110,500 |
74,000 |
Creditors |
105,000 |
136,500 |
Prepaid expenses |
2,000 |
1,000 |
Retained earning |
75,000 |
112,500 |
Cash |
75,000 |
37,500 |
|
675,000 |
787,500 |
|
675,000 |
787,500 |
Additional information:
Sales for the year Rs 380,000
Cost of goods sold Rs 190,000
Administrative expenses Rs 75,000
Purchased of machinery Rs 230,000
Furniture costing Rs 15,000 was sold for Rs 17,500
Dividend paid for 2067 Rs 15,000
required: Cash flow statement by using direct method
[Answer: CFOA = Rs 145,000; CFIA = (Rs 212,500); CFFA = Rs 30,000;
*Depn on machinery = Rs 60,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 9
The comparative balance sheet of AP Company Ltd as on 31st March are as follows:
Liabilities |
2019 |
2020 |
Assets |
2019 |
2020 |
Share capital |
5,00,000 |
6,00,000 |
Fixed assets |
6,00,000 |
8,00,000 |
Share premium |
50,000 |
60,000 |
Bills receivable |
50,000 |
40,000 |
15% Debentures |
1,00,000 |
50,000 |
Debtors |
1,00,000 |
60,000 |
Creditors |
1,50,000 |
1,90,000 |
Closing stock |
50,000 |
1,00,000 |
Retained earning |
1,00,000 |
1,50,000 |
Cash |
1,00,000 |
50,000 |
|
9,00,000 |
10,50,000 |
|
9,00,000 |
10,50,000 |
Additional information:
a. Sales for the year is Rs 10,00,000.
b. Cost of goods sold Rs 7,50,000.
c. Purchased of fixed assets of Rs 300,000 and fixed assets sold for Rs 40,000.
d. Operating expenses Rs 1,20,000.
e. Dividend paid for 2067 Rs 20,000.
required: Cash flow statement by using direct method
[Answer: CFOA = Rs 170,000; CFIA = (Rs 260,000); CFFA = Rs 40,000;
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
Problem: 10
The balance sheet of KL Company Ltd as on 31st December is as follows:
Liabilities |
2018 |
2019 |
Assets |
2018 |
2019 |
Equity shares capital |
200,000 |
300,000 |
Fixed assets |
340,000 |
540,000 |
Share premium |
20,000 |
30,000 |
Inventory |
150,000 |
50,000 |
Retained earning |
70,000 |
155,000 |
Debtors |
50,000 |
30,000 |
10% Debentures |
120,000 |
70,000 |
Cash at bank |
10,000 |
35,000 |
Creditors |
100,000 |
80,000 |
|
|
|
Outstanding expenses |
40,000 |
20,000 |
|
|
|
|
550,000 |
655,000 |
|
550,000 |
655,000 |
Additional information for the year 2020:
Sales for year Rs 585,000
Cost of goods sold Rs 300,000
Operating expenses Rs 120,000
Interest paid Rs 10,000
Tax paid Rs 20,000
Fixed assets is sold for Rs 40,000
Fixed assets purchased Rs 260,000
Dividend distributed Rs 30,000
Required: Cash flow statement by showing operating, investing and financing activities
[Answer: OA = Rs 215,000; IA = (Rs 220,000); FA = Rs 30,000;
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
Problem: 11
The balance sheet of AE Company Ltd as on 31st December is as follows:
Liabilities |
2019 |
2020 |
Assets |
2019 |
2020 |
Equity shares capital |
180,000 |
300,000 |
Fixed assets |
260,000 |
470,000 |
Bank overdraft |
20,000 |
30,000 |
Stock |
55,000 |
35,000 |
Retained earning |
70,000 |
120,000 |
Debtors |
50,000 |
30,000 |
10% Debentures |
100,000 |
150,000 |
Bills receivable |
10,000 |
25,000 |
Creditors |
50,000 |
35,000 |
Prepaid rent |
25,000 |
40,000 |
Bills payable |
20,000 |
30,000 |
Prepaid insurance |
15,000 |
20,000 |
Outstanding salary |
10,000 |
5,000 |
Cash at bank |
35,000 |
50,000 |
|
450,000 |
670,000 |
|
450,000 |
670,000 |
Additional information for the year 2020:
Sales for year Rs 528,000
Cost of goods sold Rs 250,000
Administrative expenses Rs 120,000 (including interest Rs 15,000 and tax Rs 20,000)
Selling and distribution expenses Rs 18,000
Fixed assets costing Rs 50,000 is sold at loss of Rs 15,000
Fixed assets purchased Rs 290,000
Dividend distributed Rs 45,000
Required: Cash flow statement by showing operating, investing and financing activities
[Answer: OA = Rs 145,000; IA = (Rs 255,000); FA = Rs 125,000;
*Sales of fixed assets = Rs 35,000; BOD inflow = Rs 10,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
Problem: 12
The balance sheet of DK Company Ltd as on 31st December is as follows:
Liabilities |
2019 |
2020 |
Assets |
2019 |
2020 |
Equity shares capital |
200,000 |
300,000 |
Fixed assets |
320,000 |
450,000 |
Retained earning |
80,000 |
150,000 |
Inventory |
145,000 |
50,000 |
10% Debentures |
120,000 |
50,000 |
Account receivable |
50,000 |
90,000 |
Bill payable |
100,000 |
80,000 |
Prepaid insurance |
6,000 |
8,000 |
Outstanding salary |
20,000 |
15,000 |
Prepaid rent |
9,000 |
6,000 |
Outstanding interest |
2,000 |
5,000 |
Cash at bank |
10,000 |
21,000 |
Provision for tax |
18,000 |
25,000 |
|
|
|
|
540,000 |
625,000 |
|
540,000 |
625,000 |
Additional information for the year 2020:
Sales for year Rs 527,000
Cost of goods sold Rs 280,000
Office expenses Rs 70,000
Interest expenses Rs 10,000
Provision for tax Rs 30,000
Fixed assets costing Rs 35,000 is sold for Rs 30,000
Depreciation on fixed assets Rs 25,000
Dividend distributed Rs 30,000
Debentures were redeemed with Rs 7,000 premium
Required: Cash flow statement by showing operating, investing and financing activities
[Answer: OA = Rs 178,000; IA = (Rs 160,000); FA = (Rs 7,000);
Fixed assets purchased = Rs 190,000; Tax paid = Rs 23,000;
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 13
Income Statement
AV Ccompany Ltd
For the year ended 31st March Year 2
Particulars |
Amount |
Amount |
|
Sales revenue |
|
12,00,000 |
|
Less: Cost of sales |
|
8,00,000 |
|
Gross profit |
|
400,000 |
|
Less: |
Operating expenses |
1,60,000 |
|
|
Depreciation |
80,000 |
|
|
Premium on redemption of debentures |
4,000 |
|
|
Loss on sale of plant ( book value Rs 80,000) |
20,000 |
2,64,000 |
Net profit before tax |
|
1,36,000 |
Balance Sheets for the year ended 31st March
Liabilities |
Year 1 |
Year 2 |
Assets |
Year 1 |
Year 2 |
Share capital |
4,00,000 |
8,00,000 |
Plant and machinery |
4,00,000 |
6,40,000 |
10% Debenture |
200,000 |
1,20,000 |
Investment |
1,20,000 |
1,80,000 |
Sundry creditors |
1,60,000 |
2,00,000 |
Inventories |
3,20,000 |
4,00,000 |
Bills payable |
80,000 |
40,000 |
Sundry debtors |
1,20,000 |
80,000 |
Retained earnings |
1,60,000 |
2,40,000 |
Cash at bank |
40,000 |
1,00,000 |
|
10,00,000 |
14,00,000 |
|
10,00,000 |
14,00,000 |
Additional information
Plant purchsased in year 2 Rs 4,00,000
Dividend paid Rs 56,000
required: Cash flow statement by using direct method.
[Answer: CFOA = Rs 200,000; CFIA = Rs (400,000); CFFA = Rs 260,000)
*Sales of P&M = Rs 60,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 14
The income statement and other details of AH Company Ltd for the year have been given below:
Particulars |
Amount |
Amount |
|
Sales revenue |
|
7,50,000 |
|
Less: Cost of sales |
|
4,50,000 |
|
Gross profit |
|
3,00,000 |
|
Less: |
Administrative expenses |
90,000 |
|
|
Depreciation on machinery |
75,000 |
|
|
Interest in debenture |
15,000 |
|
|
Premium on redemption of debenture |
7,500 |
|
|
Provision for tax |
75,000 |
2,62,500 |
Net profit before sale of machinary |
|
37,500 |
|
Add: Profit on sale of machinary |
|
15,000 |
|
Profit after sale of machinary |
|
52,500 |
Other details
Items |
Previouse year |
Current year |
Debtors |
1,20,000 |
75,000 |
Creditors |
60,000 |
1,05,000 |
Outstanding salary |
15,000 |
7,500 |
Inventory |
75,000 |
90,000 |
8% Debenture |
2,25,000 |
1,50,000 |
Provision for tax |
75,000 |
75,000 |
Machine (net) |
5,25,000 |
9,00,000 |
Investment |
75,000 |
1,50,000 |
Share capital |
7,00,000 |
9,75,000 |
Share premium |
50,000 |
75,000 |
Bank balance |
1,80,000 |
75,000 |
Additional information:
Machinary costing Rs 5,10,000 was purchaed during the current year
Tax paid during the year Rs 75,000
Required: Cash flow statement apply direct method
[Answer: CFOA = Rs 187,500; CFIA = (Rs 510,000); CFFA = Rs 2,17,500;
*Tax paid = Rs 75,000; Assets sold = Rs 75,000; Dividend paid = Nil;
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 15 Basic Problem: 25
Following is the extracted information from XYZ Company Ltd in 2020:
Assets and liabilities |
January |
December |
Inventory |
80,000 |
96,000 |
Account receivable |
1,28,000 |
80,000 |
Account payable |
64,000 |
1,12,000 |
Outstanding salary |
16,000 |
8,000 |
Debentures |
2,40,000 |
1,60,000 |
Provision for tax |
48,000 |
32,000 |
Proposed dividend |
32,000 |
48,000 |
Plant and machinery |
5,60,000 |
9,60,000 |
Investment |
80,000 |
1,60,000 |
Equity shares capital of Rs 100 each |
8,00,000 |
11,20,000 |
Cash and bank |
1,48,000 |
36,000 |
Income Statement
Particulars |
Amount |
Amount |
Sales |
|
8,00,000 |
Less: Cost of goods sold |
|
4,80,000 |
Gross margin |
|
3,20,000 |
Less: Operating expenses: |
|
|
Office rent and salary |
96,000 |
|
Depreciation |
80,000 |
|
Premium on redemption of debentures |
8,000 |
|
Interest on debentures |
16,000 |
|
Provision for tax |
32,000 |
2,32,000 |
Net profit before other income |
|
88,000 |
Add: Profit on plant (book value Rs 64,000) |
|
16,000 |
Net income before dividend |
|
1,04,000 |
Less: Proposed dividend |
|
48,000 |
Retained earnings |
|
56,000 |
Required: Cash flow statement by showing:
(A) Cash from operating activities; (B) Cash from investing activities
(C) Cash from financing activities; (D) Net change in cash and cash equivalent
[Answer: OA = 232,000; IA = (544,000); FA =200,000;
*P&M purchase = 5,44,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 16 Indirect Method
The balance sheets of ABC Company Ltd for the past two years are given below:
Liabilities |
2019 |
2020 |
Assets |
2019 |
2020 |
Equity share capital |
300,000 |
400,000 |
Goodwill |
115,000 |
90,000 |
8% Pref. shares capital |
150,000 |
100,000 |
Equipment |
200,000 |
170,000 |
General reserve |
40,000 |
70,000 |
Plant |
80,000 |
200,000 |
P&L account |
30,000 |
48,000 |
Debtors |
160,000 |
200,000 |
Proposed dividend |
42,000 |
50,000 |
Stock |
77,000 |
109,000 |
Provision for taxation |
40,000 |
50,000 |
Bills receivable |
20,000 |
30,000 |
Creditors |
55,000 |
83,000 |
Cash and bank |
25,000 |
18,000 |
Bills payable |
20,000 |
16,000 |
|
|
|
|
677,000 |
817,000 |
|
677,000 |
817,000 |
Additional information:
(a) Depreciation on plant Rs 100,000 and Rs 20,000 on equipment have been charged.
(b) Company paid an interim dividend Rs 20,000 in 2020
(c) Company paid Rs 35,000 income tax in 2020.
Required: (indirect method)
(A) Cash available from operating activities; (B) Cash available from investing activities
(C) Cash available from financing activities; (D) Net changes in cash and cash equivalent
[Answer: OA = 155,000; IA = (120,000); FA = 12,000;
*Plant purchase = 130,000; equipment sold = 10,000;
For NPBT, prepare P&L Adjustment (FFO) Rs 188,000 ]
PROBLEM: 17 Indirect Method
The balance sheets of ABC Company Ltd for the past two years are given below:
Liabilities |
2019 |
2020 |
Assets |
2019 |
2020 |
Share capital |
500,000 |
700,000 |
Land and building at cost |
300,000 |
300,000 |
Share premium |
50,000 |
70,000 |
Plant and machinery |
360,000 |
630,000 |
10% Debentures |
100,000 |
50,000 |
Trade investment |
40,000 |
– |
Bank overdraft |
50,000 |
100,000 |
Inventories |
150,000 |
150,000 |
Account payable |
100,000 |
80,000 |
Accounts receivable |
100,000 |
150,000 |
Provision For Taxation |
50,000 |
60,000 |
Cash at bank |
50,000 |
70,000 |
Provision For Dividend |
50,000 |
70,000 |
|
|
|
Retained Earning |
100,000 |
170,000 |
|
|
|
|
1,000,000 |
1,300,000 |
|
1,000,000 |
1,300,000 |
Additional information:
(a) Depreciation on plant and machinery was written off by Rs 70,000.
(b) Company paid a dividend and taxation of Rs 50,000 each during the 2020.
(c) Trade investment was sold for Rs 80,000 and the profit realized was credited to P&L account.
(d) A premium of 10% was paid to debenture holders at the time of redemption of debentures debts.
Required: (indirect method)
(A) Cash available from operating activities; (B) Cash available from investing activities
(C) Cash available from financing activities; (D) Net changes in cash and cash equivalent
[Answer: OA = 165,000; IA = (260,000); FA = 115,000;
Assets purchase =340,000]
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