Commerce Exam > Commerce Notes > DK Goel Solutions: Cash Flow Statement (As per AS – 3 Revised)
DK Goel Solutions: Cash Flow Statement (As per AS – 3 Revised) - Commerce PDF Download
Q1: Classify the following into:
(i) Operating activities
(ii) Investing activities
(ii) Financing activities
- Cash equivalents, while preparing a cash flow statement
- Cash sales
- Cash received from trade receivables
- Purchase of building
- Sale of building
- Issue of share capital or Debentures
- Buy-back of equity shares
- Dividend paid
- Interest paid on Debentures or Long-term loans by
(a) Finance company
(b) Non-finance company - Cash purchases
- Cash paid to trade payables
- Redemption of debentures and preference shares
- Repayment of Long-term loan
- Office expenses
- Selling and distribution expenses
- Manufacturing expenses
- Purchase of goodwill
- Sale of patents
- Purchase of investments
- Sale of investments by
(a) Finance company
(b) Non-finance company - Commission and royalty received
- Interest received on investments by
(a) Finance company
(b) Non-finance company - Dividend received on shares by
(a) Finance company
(b) Non-finance company - Rent paid
- Rent received if
(a) Company’s main business is property business
(b) Other business - Income tax paid
- Income tax refund received
- Bank balance
- Short-term deposits in the bank
- Investment in the short term or marketable securities
Ans:
Operating activities:
- Cash sales
- Cash received from trade receivables
- Interest paid on Debentures or Long-term loans by
(a) Finance company - Cash purchases
- Cash paid to trade payables
- Office expenses
- Selling and distribution expenses
- Manufacturing expenses
- Sale of investments by
(a) Finance company - Commission and royalty received
- Interest received on investments by
(a) Finance company - Dividend received on shares by
(a) Finance company - Rent paid
- Rent received if
(a) Company’s main business is property business - Income tax paid
- Income tax refund received
Investing activities:
- Purchase of building
- Sale of building
- Purchase of goodwill
- Sale of patents
- Purchase of investments
- Sale of investments by
(b) Non-finance company - Interest received on investments by
(b) Non-finance company - Dividend received on shares by
(b) Non-finance company - Rent received if
(b) Other business
Financing activities:
- Issue of share capital or Debentures
- Buy-back of equity shares
- Dividend paid
- Interest paid on Debentures or Long-term loans by
(b) Non-finance company - Redemption of debentures and preference shares
- Repayment of Long-term loan
Cash Equivalents:
- Bank balance
- Short-term deposits in the bank
- Investment in the short term or marketable securities
Q2: The following is the position of current assets and current liabilities of A Ltd.
The company incurred a loss of Rs. 45,000/- during the year. Calculate cash from operating activities.
Ans:
Calculation of Cash From Operating Activities
For the year ended 31st March 2019
FAQs on DK Goel Solutions: Cash Flow Statement (As per AS – 3 Revised) - Commerce
| 1. What is a Cash Flow Statement as per AS – 3 Revised? |  |
Ans. A Cash Flow Statement as per AS – 3 Revised is a financial statement that provides a detailed analysis of the cash inflows and outflows of a business over a specific period. It helps stakeholders understand how cash is generated and used in operating, investing, and financing activities.
| 2. What are the main components of a Cash Flow Statement? | |
Ans. The main components of a Cash Flow Statement include three sections: Operating Activities, Investing Activities, and Financing Activities. Operating Activities reflect cash generated from core business operations, Investing Activities show cash used for investments in assets, and Financing Activities detail cash flows related to borrowing and equity transactions.
| 3. How is the Cash Flow Statement prepared? | |
Ans. The Cash Flow Statement can be prepared using two methods: the Direct Method and the Indirect Method. The Direct Method lists all cash receipts and payments, while the Indirect Method starts with net income and adjusts for non-cash items and changes in working capital.
| 4. Why is the Cash Flow Statement important for businesses? | |
Ans. The Cash Flow Statement is important because it provides insights into a company’s liquidity and financial health. It helps assess the ability to generate cash, meet obligations, and fund operations or investments, which is crucial for decision-making by management and investors.
| 5. How does the Cash Flow Statement differ from the Income Statement? | |
Ans. The Cash Flow Statement differs from the Income Statement in that it focuses on actual cash movements, while the Income Statement records revenues and expenses on an accrual basis. This means that the Cash Flow Statement shows the cash available for use, whereas the Income Statement may include non-cash items like depreciation and accounts receivable.
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Nov 14, 2024 Last updated |
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