PRACTICE

QUESTIONS

1). Compute Cash Flow from Investing Activities from the following information:-
Particulars 31-3-2019 31-3-2020
Land and Building 100000 128000
Furniture and Fittings 50000 60000
Share Capital 80000 114000
Goodwill 12000 30000
Long term Investment 150000 50000
Plant and Machinery 30000 45000
During the year Rs.5000 depreciation charged on Plant and Machinery.

2.)[Link] , an accountant, in a garment manufacturing company is asked by its owner to find what amount of
machinery purchased and depreciation charged during the year by him.
Following information is provided for Mr. Ashok’s help:
i) Machinery in the beginning of the year Rs.3, 50,000
ii)Machinery at the end of the year Rs.7,00,000
iii)Accumulated depreciation in the beginning of the year Rs.1,50,000
iv)Accumulated depreciation at the end of the year Rs.1,75,000
During the year a part of machinery costing Rs.60, 000 (accumulated depreciation Rs.32, 000) sold for
Rs.20, 000. Based on the above information calculate cash flow from investing activities.

3).Compute Cash flow from Operating activities from the following information:
Particulars 31-3-2020 31-3-2021
Surplus i.e. balance in statement of profit 60000 55000
and loss
Trade payables 10000 12500
Prepaid expenses 2000 1500
Inventories 1500 17500
Outstanding rent 6000 7500
Trade receivables 20000 14000

4). From the following determine the nature of activity, type of cash flow and cash equivalents
a) Payment of wages and salaries b) Dividend paid by a trading company
c) Sale of machinery for cash d) Issue of 10% debentures for machinery purchased
e) Cash deposited into bank f) Repayment of Bank Overdraft
g) Proceeds from sale of non-current investment.

5.) From the following determine the nature and type of cash flow (if any)
a) Sold goods on credit Rs.10,000
b) Underwriting commission paid by the company Rs.3,000
c) Dividend received Rs.4,000
d) Debenture issued by the company for Rs.20,000 against purchase of building
e) Payment of interest by ICICI Bank Rs.2,000
f) Furniture purchased on credit Rs.5,000
g) Purchase of Goodwill Rs.20000
h) Cash receipt from trade receivables Rs.10000
6).Compute Cash Flow from Operating Activities from the following information:-
Particulars 31-3-2017 31-3-2016
Surplus i.e. Balance in Statement of Profit 57500 70000
and Loss
Trade Receivables 12000 14000
Outstanding expenses 7500 6000
Inventories 14000 7500
Cash and Bank balance 2000 1500
Creditors 10000 7500

7).From the following determine the nature of activity, type of cash flow and cash equivalents
i) Sale of marketable securities
ii) Loan Advance
iii)Payment for Patent and Trade Mark
iv) Redemption of preference shares
v) Rent received on property held as investment
vi)Rent received by a real estate company
vii) Current investment purchased
viii) Cash paid for purchase of goods
ix) Purchase of marketable securities
x)Interest paid on Bank Overdraft

8). Compute cash flow from Financing Activities from the following information:-
Particulars 1-4-2017 31-3-2018
Long term Loans 300000 375000
Equity Share Capital 220000 270000

During the year, the company repaid a loan of Rs.150000

9).Compute Cash Flow from Operating Activities from the following information:-
Particulars 31-3-2013 31-3-2014
Surplus i.e. Balance in Statement of Profit 65000 98000
and Loss
General Reserve 6000 9800
Sundry Debtors 1800 2600
Sundry Creditors 1000 1200
Fixed Assets 20000 25000
Provision for tax 3000 5500
Stock 6000 4000
Depreciation charged on fixed assets during the year Rs.4000.

10). From the following information of Arun &Co., prepare a Comparative Statement of profit and
Loss and comment on its results.
Particulars 31-3-2018 31-3-2019
Revenue from operations 4,00,000 3,00,000
Other Income 80,000 40,000
Expenses: 50% of Revenue from operations
 Income tax rate 40% 40%

11).Below are a Comparative Statement of Profit and loss for the year ended31st March 2021 and 2022
with some missing figures. Prepare a complete Comparative Statement of Profit and Loss
A B C D= C-B E=DX100
Particulars 31st 31st Absolute B
March,2021 March,2022 change Percentage
(Rs) (Rs) change (%)
(Rs)
I. Revenue from operations 15,00,000 ? 5,00,000 ?
II Other Income ? 10,00,000 6,00,000 ?

III. Total Revenue ? 30,00,000 11,00,000 57.89

IV. Expenses 15,00,000 21,00,000 ? ?

V. Profit before Tax (III - IV) 4,00,000 9,00,000 ? 125

VI. Tax (50%) 4,50,000 ? ?
[Link] after Tax(V-VI) 2,00,000 ? 2,50,000 ?

12. Below are the Common-Size Balance sheets of Diwan Ltd. for the year ended 31-3-19 and 2018 with some
missing values. You are asked to prepare a Common-size Balance Sheet with full information.
Particulars Note 31-3-2019 31-3-2018 % of B/S % of B/S
No. Absolute Absolute Total Total
Amount Amount 31-3-19 31-3-18
I Equity and Liabilities:

1. Shareholder’s Funds 5,00,000 10,00,000 ? 40

2. Non-current Liabilities 2,50,000 ? 25 ?
3. Current Liabilities 2,50,000 5,00,000 ? ?
10,00,000 25,00,000 100 ?
Total
II Assets:
Non-Current assets 6,25,000 15,00,000 67.5 ?
Current assets 3,75,000 10,00,000 ? 40
10,00,000 25,00,000 ? 100
Total
 13. Prepare a Common-size Balance Sheet of Evergreen Ltd. from the following information and analyse its
results.
Particulars Note 31-3-2019 31-3-2018
No. Amount Amount
I Equity and Liabilities:

1. Shareholder’s Funds 20,00,000 10,00,000

2. Non-current Liabilities 20,00,000 5,00,000
3. Current Liabilities 10,00,000 5,00,000
Total 50,00,000 20,00,000
II Assets:
1. Non-Current assets 30,00,000 12,50,000
2. Current assets 20,00,000 7,50,000

Total 50,00,000 20,00,000

14) The profit of Jova Ltd. for the year ended 31st March, 2019 after appropriation was Rs.2, 50,000
Additional Information:
[Link] Particulars Amount
1. Depreciation of Machinery 20,000
2. Goodwill written off 9,000
3. Loss on sale of Furniture 2,000
4. Transfer to General Reserve 22,500
The following was the position of its Current assets and Current Liabilities as at 31st March, 2018 and 2019.
Particulars 31-3-2018 31-3-2019
Income Received in advance 8,000 ------
Inventory 12,000 8,000
Calculate the Cash flow From Operating Activities.
1 Cash flow from Investing Activities
PARTICULARS AMOUNT AMOUNT
Purchase of Land and Building (1,28,000-1,00,000) (28,000)
Purchase of Furniture and fittings ( 60,000-50,000) (10,000)
Purchase of Goodwill ( 30,000 – 12,000) (18,000)
Proceeds from sale of Long term Investment (1,50,000-50,000) 1,00,000
Purchase of Plant and Machinery
(20,000)
Cash flow from Investing Activities 24,000

Plant & Machinery A/c

Bal b/d 30000 Dep 5000
Purchase (Bal Fig) 20,000 Bal c/d 45000
50,000 50,000

2 MACHINERY ACCOUNT
PARTICULARS AMOUNT PARTICULARS AMOUNT
Balance b/d 3,50,000 Accumulated depreciation 32,000
Bank A/c (Purchase) ([Link]) 4,10,000 Bank a/c (Sale) 20,000
Profit and loss (Loss)
(60,000 -32,000)=(28,000- 8,000
20,000)

Balance c/d 7,00,000

7,60,000 7,60,000

ACCUMULATED DEPRECIATION ACCOUNT

PARTICULARS AMOUNT PARTICULARS AMOUNT
Machinery a/c 32,000 Balance b/d 1,25,000
Balance c/d 3,75,000 Profit and Loss
(Depreciation) ([Link]) 2,82,000
4,07,000 4,07,000

Cost 60,000
- Accu Dep (32,000)
WDV / BV 28,000
Sold (20,000)
Loss 8000

CALCULATION OF CASH FLOW FROM INVESTING ACTIVITES:

PARTICULARS AMOUNT
Proceeds from sale of Machinery 20,000
Purchase of machinery (4,10,000)
Cash used in Investing Activities (3,90,000)
3 CASH FLOW FROM OPERATING ACTIVITIES
PARTICULARS AMOUNT AMOUNT
CASH FLOW FROM OPERTING ACTIVITIES
Net loss as per statement of profit and loss
(60,000 – 55,000) (5,000)
Add: Increase in Trade Payables (12,500 -10,000) 2,500
Decrease in Prepaid expenes (2,000 – 1,500) 500
Increase in Outstanding rent (7,500-6,000) 1,500
Decrease in Trade receivables ( 20,000-14,000 6,000
Less: Increase in Inventories (17,500 – 1,500) (16,000)
Cash used in operating activities (10,500)

4 Transaction Nature of Activity Type of cash flow

a) Payment of wages and salaries operating Outflow
b) Dividend paid by Trading company Financing Outflow
c) Sale of machinery for cash investing Inflow
d) Issue of 10% debentures for machinery - No flow
purchased
e) Cash deposited into bank Cash and cash
equivalents No flow
f) Repayment of bank overdraft Financing Outflow
g) Proceeds from sale of non-current Investment Investing Inflow

5 Transaction Nature of Type of

Activity cash flow
a) Sold goods on credit No flow
b) Underwriting commission paid by the company Financing outflow
c) Dividend received Investing Inflow
d) Debenture issued by the company for Rs. 20,000 No flow
against purchase of building
e) Payment of interest by ICICI bank Operating Outflow
f) Furniture purchased on credit Rs. 5,000 No flow
g) Purchase of goodwill Rs. 20,000 Investing outflow
h) Cash receipts from trade receivables operating inflow

6 CASH FLOW FROM OPERATING ACTIVITIES

PARTICULARS AMOUNT AMOUNT
CASH FLOW FROM OPERTING ACTIVITIES
Net Loss as per statement of Profit and loss
(70,000 – 57,500) (12,500)
Add: Decrase in Trade Receivables (14,000-12,000 2,000
Increase in outstanding expenses (7,500-6,000 1,500
Increase in Creditors ( 10,000 – 7,500) 2,500
Less: Increase in Inventories (14,000 – 7,500) (6,500)
Cash used in operating activities (13,000)
7
Transaction Nature of Activity Type of cash flow
Sale of marketable securities Cash and cash equivalents No flow
Loan advanced Investing Outflow
Payment for patent and trade Investing Outflow
mark
Redemption of preference Financing Outflow
shares
Rent received on property held Investing Inflow
as investment
Rent received by a real estate Operating Inflow
company
Current investment purchased Cash and cash equivalents No flow
Cash paid for purchase of Operating Outflow
goods
Purchase of marketable Cash and cash equivalents No flow
securities

8. CALCULATION OF CASH FLOW FROM FINANCING ACTIVITIES

PARTICULARS AMOUNT AMOUNT
Repayment of Loan (1,50,000)
Proceeds from Long term loan 2,25,000
Proceeds from issue of Equity shares (2,70,000 – 2,20,000) 50,000
Cash flow from Financing activities 1,25,000

Long term loan

Loan repaid 1,50,000 Bal b/d 3,00,000
    Proceeds from loan 2,25,000
Bal C/d 3,75,000    
       
 5,25,00
  0   5,25,000 
9. CALCULATION OF CASH FLOW FROM OPERATING ACTIVITIES
PARTICULARS AMOUNT AMOUNT
Profit before tax and extra ordinary items
Profit as per statement of profit and Loss (98,000 – 65,000) 33,000
Add: Transfer to General Reserve (9,800 – 6,000) 3,800
Provision for tax 5,500
42,300
Add: Depreciation 4,000
Operating profit before working capital changes 46,300
Add: Increase in creditors ( 1,200- 1,000) 200
Decrease in stock ( 6,000 – 4,000) 2,000
Less: Increase in Sundry Debtors (2,600 – 1,800) (800)
Cash generated from operation 47,700
Less: Tax paid (3,000)
Cash flow from operating activities 44,700
10. Particulars 31.3.18 31.3.19 Absolute Percentage
change change
Revenue from 4,00,000 3,00,000 (1,00,000) (25)
operations
Other Income 80,000 40,000 (40,000) (50)
Total income 4,80,000 3,40,000 (140000) (29.16)

Expenses 2,00,000 1,50,000 (50000) (25)

Profit before tax 2,80,000 1,90,000 (90000) (32.14)

Less: Tax 1,12,000 76,000 (36000) (32.14)
Profit after tax 1,68,000 1,14,000 (54,000) (32.14)

11. A B C D= C-B E=DX100

Particulars 31st 31st Absolute B
March,202 March,2022 change Percentage change
1 (Rs) (%)
(Rs) (Rs)
I. Revenue from operations 15,00,000 20,00,000 5,00,000 33.34
II Other Income 4,00,000 10,00,000 6,00,000 150

III. Total Revenue 19,00,000 30,00,000 11,00,00 57.89

0
IV. Expenses 15,00,000 21,00,000 40
6,00,000
V. Profit before Tax (III - IV)
VI. Tax (50%) 4,00,000 9,00,000 5,00,000 125
[Link] after Tax(V-VI) 2,00,000 4,50,000 2,50,000 125
2,00,000 4,50,000 2,50,000 125

12. Particulars Note 31-3-2019 31-3-2018 % of B/S % of B/S

No. Absolute Absolute Total Total
Amount Amount 31-3-19 31-3-18
I Equity and Liabilities:

1. Shareholder’s Funds 5,00,000 10,00,000 50% 40

2. Non-current Liabilities 2,50,000 10,00,000 25 40%
3. Current Liabilities 2,50,000 5,00,000 25 ?
10,00,000 25,00,000 100 100%
Total
II Assets:
Non-Current assets 6,25,000 15,00,000 67.5 60
Current assets 3,75,000 10,00,000 37.5 40
10,00,000 25,00,000 100% 100
Total