Commerce Exam  >  Commerce Notes  >  TS Grewal Solutions - Class 12 Accountancy  >  Cash Flow Statement (Part - 1)

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce PDF Download

Page No. 5.89

Question:1
Identify the transactions as belonging to (i) Operating Activities, (ii) Investing Activities, (iii) Financing Activities and iv Cash and Cash Equivalents:

(a) Cash Sale of Goods
(b) Cash Received against Revenue from Services rendered
(c) Cash Purchase of Goods
(d) Cash Paid against Services Taken
(e) Patents Purchased
(f) Marketable Securities
(g) Bank Overdraft
(h) Proceeds from Issue of Debentures
(i) Purchase of Shares
(j) Repayment of Long-term Loan
(k) Commission Received
(l) Redemption of Debentures
(m) Interest on Debentures
(n) Interest on Investments
(o) Income Tax Paid
(p) Income Tax Paid on Gain of Sale of Asset
(q) Cash Received from Debtors
(r) Cash Paid to Creditors.
Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Page No. 5.90

Question:2
Classify the following transactions as Operating Activities for a financial company and a non-financial company:
(a) Purchase of Shares on a Stock Exchange.
(b) Dividend received on Shares.
(c) Dividend paid on Shares.
(d) Loans given.
(e) Loans taken.
(f) Interest paid on borrowings.
Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
A financial company deals with securities like shares, bonds, debentures, etc on a regular basis. These securities form part of their stock and hence purchase and sale of these securities will be categorised under Operating Activity. But, Dividend paid by them will be the part of Financing Activities.
However, for a non-financial company issue of shares, debentures, etc form part of financing activities as such issue will increase the capital employed in the business.

Page No. 5.90

Question:3
State which of the following would result in inflow/outflow or no flow of Cash and Cash Equivalents:
(a) Sale of Fixed Assets, Book Value 1,00,000 at a profit of 10,000.
(b) Sale of goods against cash.
(c) Purchase of machinery for cash.
(d) Purchase of Land and Building for 10,00,000. Consideration paid by issue of debentures.
(e) Issued fully paid Bonus Shares.
(f) Cash withdrawn from bank.
(g) Payment of Interim Dividend.
(h) Proposed Dividend.

Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:3
State which of the following would result in inflow/outflow or no flow of Cash and Cash Equivalents:
(a) Sale of Fixed Assets, Book Value 1,00,000 at a profit of 10,000.
(b) Sale of goods against cash.
(c) Purchase of machinery for cash.
(d) Purchase of Land and Building for 10,00,000. Consideration paid by issue of debentures.
(e) Issued fully paid Bonus Shares.
(f) Cash withdrawn from bank.
(g) Payment of Interim Dividend.
(h) Proposed Dividend.
Solution:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:4
For each of the following transactions, calculate the resulting Cash Flow and state the nature of Cash Flow, i.e., whether it is Operating, Investing or Financing:

(a) Acquired machinery for 2,50,000 paying 20% by cheque and executing a bond for the balance payable.
(b) Paid 2,50,000 to acquire shares in Informa Tech Ltd. and received a dividend of 50,000 after acquisition.
(c) Sold machinery of original cost of 2,00,000 with an accumulated depreciation of 1,60,000 for 60,000.
Solution:

(a) Investing Activity: 50,000
(b) Investing Activity: 2,00,000
(c) Investing Activity: 60,000

Question:5
Following are the extracts from the Balance Sheet of MAH Ltd. as at 31st March, 2019:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Additional Information: Proposed Dividend for the years ended 31st March, 2018 and 2019 are 4,00,000 and 5,00,000 respectively.
Prepare the Note to show Net Profit before Tax and Extraordinary Items.

Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Page No. 5.91

Question:6
Following is the extract from the Balance Sheet of Zee Ltd.:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Additional Information:
(i) Proposed dividend on equity shares for the year 2017-18 and 2018-19 are
1,60,000 and 2,00,000 respectively.
(ii) An Interim Dividend of 40,000 on Equity Shares was paid. Calculate Net Profit before Tax and Extraordinary Items.
Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:7
Calculate Net Profit before Tax and Extraordinary Items of Premier Sales Ltd. from its Balance Sheet as at 31st March, 2019:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Notes to Accounts
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Additional Information:
(i) Proposed Dividend for the years ended 31st March, 2018 and 2019 are 50,000 and 75,000 respectively.
(ii) Interim Dividend paid during the year was 10,000.
Solution:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:8
From the following information, calculate Net Profit before Tax and Extraordinary Items:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Solution:

Cash Flow Statement

for the year ended...

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:9
From the following information, calculate Operating Profit before Working Capital Changes:
Net Profit before Tax and Extraordinary Items                   4,47,000
Depreciation on Machinery                                                84,000
Interest on Borrowings                                                      16,800
Goodwill Amortised                                                           18,600
Loss on Sale of Furniture                                                  18,000
Premium on Redemption of Preference Shares                 6,000
Gain Profit on Sale of Investments                                    12,000
Interest and Dividend Received on Investments                 27,600

Solution:

Cash Flow Statement

for the year ended March 31, ....

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Note: Assuming Premium on Redemption of Preference Shares has been paid out of the Securities Premium Reserve Balance.

Question:10

From the following Balance Sheet of Double Tree Ltd. as at 31st March, 2019 and additional information, calculate Operating Profit before Working Capital Changes:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Notes to Accounts
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Additional Information: Depreciation for the year was 75,000.
Solution:

Computation of Operating Profit before Working Capital Changes

for the year ended March 31, 2019

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:11
Calculate Cash Flow from Operating Activities from the following details:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:12
Compute Cash Flow from Operating Activities from the following information:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Solution:

Cash Flow from Operating Activities

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:13
Calculate Cash Flow from Operating Activities from the following:
(i) Profit form the year is 7,00,000 after considering the following items:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
(ii) Following is the position of Current Assets and Current Liabiliites
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Solution:

Cash Flow from Operating Activities

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:14
Grand Hospitality Ltd., reported Net Profit after Tax of 6,40,000 for the year ended 31st March, 2019. The relevant extract from Balance Sheet as at 31st March, 2019 is:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Depreciation charged on Plant and Machinery 55,000, insurance claim received 50,000, gain profit on sale of investment 20,000 appeared in the Statement of Profit and Loss for the year ended 31st March, 2019. Calculate Cash Flow from Operating Activities.
Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:15
Calculate Cash Flow from Operating Activities from the following information.

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Solution:

Cash Flow from Operating Activities

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:16
Following information is related to ABC Ltd.:

STATEMMENT OF PROFIT AND LOSS

for the year ended 31st March, 2019

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Notes to Accounts
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Calculate Cash Flow from Operating Activities.
Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:17
Compute Cash Flow from Operating Activities from the following:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
An asset costing 40,000 having book value of 28,000 was sold for 36,000.
Solution:

Cash Flow from Operating Activities

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Working Note1:

Provision for Depreciation Account

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:18 Charles Ltd. earned a profit of 1,00,000 after charging depreciation of 20,000 on assets and a transfer to General Reserve of 30,000. Goodwill amortised was 7,000, and gain on sale of machinery was 3,000. Other information available is changes in the value of Current Assets and Current Liabilities: trade receivables showed an increase of 3,000; trade payables an increase of 6,000; Prepaid expenses an increase of 200; and outstanding expenses a decrease of 2,000. Ascertain Cash Flow from Operating Activities.
Solution:

Cash Flow Statement

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:19
Compute Cash Flow from Operating Activities from the following:

(i) Profit for the year ended 31st March, 2019 is 10,000 after providing for depreciation of 2,000.
(ii) Current Assets and Current Liabilities of the business for the year ended 31st March, 2018 and 2019 are as follows:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Solution:

Cash Flow Statement

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:20
Calculate Cash Flow from Operating Activities from the following information:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Notes to Accounts
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Solution:

Cash Flow Statement

for the year ended March 31, 2019

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:21
21 Mars Ltd. has Plant and Machinery whose written down value on 1st April, 2017 was 9,60,000 and on 31st March, 2018 was 10,50,000. Depreciation for the year was 35,000. In the beginning of the year, a part of plant was sold for 45,000 which had a written down value of 30,000. Calculate Cash Flow from Investing Activities.
Solution:

Cash Flow from Investing Activities

for the year ended March 31, 2017

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Working Notes:

Plant and Machinery Account

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:22
From the following details. calculate Cash Flow from Investing Activities
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Additional Information:
1. During the year, machine costing 90,000 with accumulated depreciation of 60,000 was sold for 50,000.
2. Patents written off were 50,000 while a part of patents were sold at a profit of 
40,000.
Solution:

Cash Flow from Investing Activities

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Working Notes:
WN1:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
WN2:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
WN3:

Provision for Depreciation Account

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:23
Welprint Ltd. has given the following information:
Machinery as on 1st April, 2018                                  50,000
Machinery as on 31st March, 2019                             60,000
Accumulated Depreciation on 1st April, 2018             25,000
Accumulated Depreciation on 31st march, 2019        15,000
During the year, a machine costing 25,000 accumulateddepreciationthereon
15, 000 was sold for 13,000.
Calculate Cash Flow from Investing Activities on the basis of the above information.
Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Working Notes:

Machinery Account

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Accumulated Depreciation Account

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:24
From the following details. Calculate Cash Flow from Investing Activities
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Additional Information:
1. Half of the investment held in the beginning of the year were sold at 10% profit.
2. Depreciation on Land and Building was 50,000 for the year.
3. Interest received on investments 75,000.

Solution:

Cash Flow from Investing Activities

for the year ended March 31, 2019

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
Working Notes:
WN1:

Land and Building Account

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
WN2:

Investment in Debentures Account

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

Question:25
From the following information, calculate Cash Flow from Investing Activities:

Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce
A building was purchased as investment out of surplus which was let out for commercial purposes. Rent Received 20,000.
Solution:
Cash Flow Statement (Part - 1) | TS Grewal Solutions - Class 12 Accountancy - Commerce

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FAQs on Cash Flow Statement (Part - 1) - TS Grewal Solutions - Class 12 Accountancy - Commerce

1. What is a cash flow statement?
Ans. A cash flow statement is a financial statement that provides information about the inflow and outflow of cash in an organization during a specific period. It shows how cash is generated and used by a company, including operating activities, investing activities, and financing activities.
2. Why is a cash flow statement important?
Ans. A cash flow statement is important because it helps evaluate the liquidity and financial health of a company. It provides insights into the cash flow patterns of a business, helping investors and stakeholders assess its ability to generate cash and meet its financial obligations.
3. How is a cash flow statement different from an income statement?
Ans. A cash flow statement and an income statement are different in terms of the information they provide. While an income statement shows the profitability of a company by presenting its revenues and expenses over a specific period, a cash flow statement focuses on the actual cash inflows and outflows during that period.
4. What are the three main sections of a cash flow statement?
Ans. The three main sections of a cash flow statement are operating activities, investing activities, and financing activities. Operating activities refer to the company's core business operations, such as sales and expenses. Investing activities include the purchase or sale of assets, while financing activities involve activities related to borrowing, repayments, and issuing equity.
5. How can a negative cash flow affect a company?
Ans. A negative cash flow indicates that a company is spending more cash than it is generating. This can lead to financial issues such as difficulty paying bills, servicing debt, or investing in growth opportunities. It may also signal a potential cash crunch, which can harm the company's ability to operate effectively and meet its obligations.
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