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Cash Flow Statement-4
ØCash Flow Statement It is a statement that shows flow of cash and cash equivalents during the period under report. The statement net increase or decrease of cash and cash equivalents under each activity separately- operating, investing and financing as well as collectively.
ØObjectives of CFS:
•To ascertain the sources (receipts) of cash and cash equivalents under operating,investing and financing activities by the enterprise.
•To ascertain applications (payments) of cash and cash equivalents under operating, investing and financing activities by the enterprise.
•To ascertain net change in cash and cash equivalents being the difference between sources and applications under the three between the dates of two balance sheets.
ØSteps in the preparation of CFS:
I. Ascertain cash flows from operating activities
II. Ascertain cash flows from investing activities
III. Ascertain cash flows from financing activities
IV. Steps I, II AND III are added and the resultant figure is net increase or decrease in cash and cash equivalents.
V. Cash and cash equivalents of the beginning is added to the cash flow arrived under step IV.
VI. In the last we get cash and cash equivalents at the end
ØCASH AND CASH EQUIVALENTS: It includes cash, bank balance, marketable securities etc
1. Why is Cash Flow Statement prepared?
2. Give the classification of the Cash Flow for preparing Cash Flow Statement.
3. Give any two items of cash equivalent used while preparing Cash Flow Statement.
4. How are non-cash items dealt in Cash Flow Statement?
5. Give an example of non-cash transaction.
6. Dividend received by a Finance Company will come under which activity while preparing Cash Flow Statement.
Identify the following transactions belonging to
(i) Operating Activities, (ii) Investing Activities,
(iii) Financing Activities, and (iv) Cash and Cash Equivalents:
1. Cash Sales 11. Cash paid to Creditors
2. Cash Purchase 12. Purchase of Machines
3. Rent paid 13. Income Tax refund received
4. Cash-in-hand 14. Issue of Share Capital
5. Income Tax paid 15. Sale of Patents
6. Office Expenses 16. Manufacturing Expenses
7. Balance at Bank 17. Purchase of Goodwill
8. Sale of Machines 18. Short-term Deposits in Banks
9. Issue of Debentures 19. Purchase of investments(non-current)
10. Dividend paid 20. Cash received from Debtors
Sol: Operating Activities: 1,2,3,5,6,11,13,16 and 20; Investing Activities: 8,12,15,17 and 19;
Financing Activities: 9,10 and 14; Cash and Cash Equivalents: 4,7 and 18;
Calculate Cash Flow from Operating Activities from the following details:
9. From the following information, calculate Cash Flow from Investing Activities:
During the year, a machine costing Rs. 40,000 with its accumulated depreciation of Rs. 24,000 was sold for Rs. 20,000.Patents were written off to the extent of Rs. 40,000 and some patents were sold at a profit of Rs. 20,000.( Cash Flow from Investing Activities is Rs. 60,000.)
10. From the following information, calculate Cash Flow from Financing Activities:
Additional Information: Interest Paid on debentures Rs. 10,000.
(Cash Flow from Financing Activities is Rs. 50,000.)
11. From the following information, prepare CFS for the year ended 31st March, 2014:
10. Following are the Balance Sheets of X Ltd. prepares Cash Flow Statement.
Q.23. From the given notes to accounts and Cash Flow Statement of Red Hot Dog Ltd Complete the Missing Figure: 6
NOTES TO ACCOUNTS:
1. Depreciation charged on plant & Machinery for the year 2014-15 was Rs.1,75,000. During the year 2014-2015, plant and Machinery of Rs.7,25,000 was purchased.
2. Interest on Mortgage loan paid during the Year amounted to Rs.35,000.
3. Dividend paid during the year Rs.44,000.
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