Important Questions Class 12 Accountancy Chapter 14 Cashflow statement

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CBSE Class 12 Accountancy Important Questions Chapter 14 Cashflow statement

1: X Ltd. Made a profit of Rs. 1,00,000 after considering the following items:
1. Depreciation of fixed assets Rs. 20,000
2. Writing off preliminary expenses Rs. 10,000
3. Loss on sale of furniture Rs. 1,000
4. Provision of Taxation Rs. 1,60,000
5. Transfer to General reserve Rs. 14,000
6. Profit on sale of Machinery Rs. 6,000
The following additional information is available to you:

 Particulars 31.03.2014  Rs. 31.03.2015  Rs. Debtors  Creditors Bills Receivables Bill Payables Prepaid Expenses 24,000  20,000 20,000 16,000 400 30,000  30,000 17,000 12,000 600

Calculate Cash Flow from Operating Activities.
Solution :
Calculation of Net Profit before Tax and Extra-ordinary items:
Net Profit (Given) Rs. 1,00,000
Add: Provision for Taxation Rs. 1,60,000
Transfer to general reserve Rs. 14,000
Net Profit before Tax and Extra-ordinary item Rs. 2,74,000

2: From the following information calculate cash flow from investing activities:

 Particulars 31.03.2014  Rs. 31.03.2015  Rs. Machinery (at Cost)  Accumulated Depreciation Patents Goodwill Investment 5,00,000  1,00,000 2,00,000 1,50,000 2,50,000 5,50,000  1,20,000 1,20,000 1,00,000 5,00,000

(i) During the year, a machine costing Rs. 50,000 with its accumulated depreciation of Rs. 25,000 was sold for Rs. 20,000.
(ii) Patents were written off to the extent of Rs. 60,000 and some patents were sold at a profit of Rs. 10,000.
(iii) 40% of the investments held in the beginning of the year were sold at 10% Profit.
(iv) Interest received on investment Rs. 25,500.
(v) Dividend received on investment Rs. 8,500.
Solution :

 Particulars Rs. Proceeds from sale of machinery  Proceeds from sale of investment Proceeds from sale of Patents Cash paid purchase of Machinery Cash paid purchase of Investment Interest Received Rent Received Net Cash Used in Investing activities 20,000  1,10,000 30,000 (1,00,000) (3,50,000) 25,500 8,500 5,000 (2,51,000)

Working Notes :
Investment Account

 Date Particulars Rs. Date Particulars Rs. To Balance b/d  To Profit on sale of investment A/c To Back A/c (Additional Purchase) 2,50,000  10,000   3,50,000 By Bank A/c  (Sale of investment) By Balance c/d 1,10,000    5,00,000 6,10,000 6,10,000

Machinery Account (at original cost)

 Date Particulars Rs. Date Particulars Rs. To Balance b/d  To Back A/c (Additional Purchase) 5,00,000    1,00,000 By Bank A/c  (Sale of investment) By Pro for Depreciation A/c (Dep. On Machinery sold) By Loss on sale of Machinery A/c By Balance c/d 20,000      25,000       5,000 5,50,000 6,00,000 6,00,000

Provision for Depreciation Account

 Date Particulars Rs. Date Particulars Rs. To Machinery A/c  (Total Depreciation on Machinery sold) To balance c/d 25,000      1,20,000 By Balance b/d  By Statement of Profit & loss (Depreciation charged on machinery during the current year) 1,00,000  45,000 1,45,000 1,45,000

Patents Account

 Date Particulars Rs. Date Particulars Rs. To Balance b/d  To Profit on sale of patents A/c 2,00,000    10,000 By Bank A/c  (B/F – Sale of Patents) By Statement of Profit & Loss (Written off) By Balance c/d 30,000  60,000       1,20,000 2,10,000 2,10,000

3: From the following information, calculate the net cash flow from Financing Activities:

 Particulars 31.03.2014  Rs. 31.03.2015  Rs. Equity Share Capital  9% Debentures Proposed Dividend Dividend Payable 10% Preference Share Capital 10,00,000  1,50,000 3,00,000 ………… 2,00,000 16,00,000  1,00,000 3,50,000 50,000 3,00,000

1. Interest paid on Debentures  Rs.12,500.
2. During the year 2014-2015, company issued bonus shares to equity shareholders in the ratio of 2:1 by capitalizing reserve.
3. The interim dividend of Rs. 75,000 has been paid during the year.
4. 9% Debentures were redeemed as 5% premium.
Solution :
Cash Flow from Financing Activities

 Particulars 31.03.2015  Rs. Proceeds from Issue of Equity Share Capital  Proceeds from Issue of 10% Preference Share Capital Cash paid for Redemption of 9% Debentures  Interest paid on Debentures Interim Dividend paid Final Dividend paid (3,00,000-50,000) Net Cash Used  in Financing Activities) 1,00,000  1,00,000 (52,500) (12,500) (75,000) (2,50,000) 1,90,000

4: From the following Balance Sheets of X Ltd. As on 31.03.2014 and 31.03.2015. Prepare a cash flow statement.
Balance Sheet as at 31st March, 2014 and 2015

 Particulars Note No. Figure as at the end of  31.3.2014 (Rs.) Figure as at the end of  31.3.2014 (Rs.) 1. EQUITY AND LIABILITIES  Shareholders’ funds (a) Share capital (b) Reserves and surplus Current liabilities Trade payables Total 45,000 25,000   8,700 65,000 42,500   11,000 78,700 1,18,500 II. ASSETS  (1)Non-current assets (a)Fixed assets (i) Tangible Assets (2)Current Assets Inventories Trade receivables Cash and cash equivalents Total 46,700   11,000 18,000 3,000 83,000   13,000 19,500 3,000 78,700 1,18,500

Note to Accounts

 Particulars Figure as at the end of  31.3.2014 (Rs.) Figure as at the end of  31.3.2014 (Rs.) Note No. 1. Reserve and Surplus: General Reserve  Balance in Statement of P&L A/c Total 15,000    10,000 27,500    15,000 25,000 42,500

(i) Depreciation on fixed assets for the year 2014-15 was Rs. 14,700.
(ii) An interim divided Rs. 7,000 has been paid to the shareholders during the year.
Solution :

 Calculation of Net  Profit before Tax and Extraordinary item:  Net Profit as per Balance in Statement of Profit & Loss A/c (15000 – 1,000) Add : Transfer to General Reserve (27,500 -15,5000) Add : Interim dividend paid during the year Net Profit before Tax-and Extraordinary item Rs.  5,000 12,500 7,000 24,500

Cash Flow Statement
For the year ended 31st March 2015

 Particulars Details  Rs. Amounts  Rs. A. Cash flow from operating activities  Net Profit Before Tax and Extra-ordinary Item Adjustment for non-cash and non-operating items Add : Depreciation on fixed assets Operating Profit before working capital changes Adjustment for Working Capital Changes Add : Increase in Trade Payables   Less : Increase in trade receivable Increase in Inventories Net Cash Inflow from Operating Activities B. Cash Flow from Investing Activities Purchase of Fixed Assets Net Cash Used in Investing Activities C. Cash Flow From Financing Activities Issue of share capital Payment of interim dividend Cash Flow from Financing Activities Net Increase in Cash & Cash equivalent Add : Cash & Cash Equivalent at the beginning of year Cash & Cash Equivalent at the end of year 24,500   14,700 38,000     (51,000)     13,000 39,200    2,300 41,500  (1,500) (2,000) (51,000) 20,000 (7,000) NI    3,000 3,000

Fixed Assets Account

 Date Particulars Rs. Date Particulars Rs. To Balance b/d  To Back A/c (Additional Purchase) 46,700  51,000 By Depreciation A/c  (Current year dep. On remaining fixed assets) By Balance c/d 14,700        83,000 97,700 97,700

5: Prepare a Cash Statement on the basis of the information given in the Balance Sheet of Live Ltd. As at 31.03.2015 and 31.03.2014:

 Particulars Note No. 31.3.2014 (Rs.) 31.3.2014 (Rs.) 1. EQUITY AND LIABILITIES  (1) Shareholders’ funds (a) Share capital (b) Reserves and surplus (2) Non-current Liabilities (a) Long term-borrowings              (3) Current liabilities (a) Trade payables Total 2,10,000 1,32,000   1,50,000   75,000 1,80,000 24,000   1,50,000   27,000 5,67,000 3,81,000 II. ASSETS  (1) Non-current assets (a) Fixed assets (i) Tangible Assets (b) Non-current Investments (2) Current Assets (a) Current-Investments (Marketable) (b) Inventories (c) Trade receivables (d) Cash and cash equivalents Total 2,94,000 48,000     54,000 1,07,000 40,000 24,000 2,52,000 18,000     60,000 24,000 17,500 9,500 5,67,000 3,81,000

Notes to Accounts:
Note – 1

 Particulars 2015 (Rs.) 2014  (Rs.) Reserve and Surplus Surplus (Balance in Statement of Profit and Loss) 1,32,000 24,000

Solution :
Cash Flow Statement
For the year ended 31st March 2015

 Particulars Details  Rs. Amounts  Rs. Cash flow from operating activities  Net Profit Before Tax and Extra-ordinary Item Add : Non cash and Non-operating charges Operating Profit before working capital changes Add : Increase in Current Liabilities   Increase in trade payables   Less : Increase in Current Assets Increase in trade receivables Increase in inventories Cash generated from Operating Activities Cash Flow from Investing Activities Purchase of Fixed Assets Purchase of noncurrent investments Cash Used in Investing Activities. Cash Flow From Financing Activities Issue of share capital Cash Flow from Financing Activities Net Increase in Cash & Cash equivalent Add : Opening balance of cash & cash equivalents : Marketable Securities Cash & Cash Equivalent   Closing balance of cash & cash equivalent Marketable Securities Cash & Cash Equivalent 1,08,000 – 50,500         (72,000)   30,000 1,08,000      48,000 1,56,000  (22,500) (83,000) (42,000) (30,000) 30,000       60,000 9,500 8,500        69,500 54,000 24,000 78,000

6: From the following information, Complete the Cash flow Statement of RK Ltd.
Cash Flow Statement
For the year ended on 31st March 2015

 Particulars Rs. Rs. A. Cash flow from operating activities  Net Profit Before Tax and Extra-ordinary Item Adjustment for non-cash and non-operating items Depreciation Loss on sale of Machinery Operating Profit before working capital changes Adjustment for charges in working Capital Capital Decrease in Trade Payables Increase in Inventory Cash generated from operation before tax and extraordinary items Less : Increase tax paid Net cash flow from operating activities B. Cash Flow from Investing Activities Purchase of Fixed Assets Sale of Machinery Net cash flow from Investing Activities C. Cash Flow From Financing Activities Proceeds from Issue of share Net cash flow from Financing Activities (A+B+C) Net Increase in Cash & Cash equivalent during the year Add : Cash & Cash Equivalent at the beginning of the period Cash & Cash Equivalent at the end of the period ………..   ……….. ……….. ………..       ………..   ……….. ………..      (8,000) (………..) 50,000    (………..) (………..) ……….. ……….. ……….. ………..

Note to Accounts

 Particulars 31.3.2014  (Rs.) 31.3.2014  (Rs.) Note 1. Reserve and Surplus:  General Reserve Balance in Statement of P&L   Note 2. Cash and Cash Equivalents Cash at Cash   Note 3. Short term Provisions Provision for Taxation 55,000 70,000 40,000 50,000 1,25,000 90,000 52,000 37,000 52,000 37,000 25,000 20,000 25,000 20,000

(1) Depreciation charges on Building for the3 year 2014-15 was Rs. 10,000.
(2) During the year 2014-15, machinery of Rs. 1,38,000 was purchased.
(3) A part of machinery costing Rs. 20,000 with accumulated depreciation of Rs 6,500 was sold for Rs. 8,500.
(4) Income tax paid during the year 2014-15 was Rs. 18,000.
Solution:
Cash Flow Statement
For the year ended 31-3-2015

 Particulars Rs. Rs. A. Cash flow from operating activities  Net Profit Before Tax and Extra-ordinary Item Adjustment for non-cash and non-operating items Depreciation Loss on sale of Machinery Operating Profit before working capital changes Adjustment for charges in working Capital Decrease in Trade Payables Increase in Inventory Cash generated from operation before tax and extraordinary items Less : Increase tax paid Net cash flow from operating activities B. Cash Flow from Investing Activities Purchase of Fixed Assets Sale of Machinery Net cash flow from Investing Activities C. Cash Flow From Financing Activities Proceeds from Issue of share Net cash flow from Financing Activities (A+B+C) Net Increase in Cash & Cash equivalent during the year Add: Cash & Cash Equivalent at the beginning of the period Cash & Cash Equivalent at the end of the period 58,000   10,000 5,000 32,000       (1,29,500)     1,12,500 73,000    (8,000) (15,000) 50,000 (18,000) (1,38,000) 8,5000 1,12,500 15,000 37,000 52,000

Working Notes
1. Calculation of Net Profit before tax and extraordinary items :-
Rs.
Difference in Balance in statement of P&L (70,000-50,000) 20,000
Add : Transfer to General Reserve15,000
Provision for Taxation23,000
58,000
2. Provision for Taxation Account

 Particulars Rs. Particulars Rs. To Balance b/d  (Tax Paid) To Back A/c 18,000 25,000 By Balance b/d  By Statement of P&L (Balancing Figure – Provision mad during the year) 20,000    23,000 43,000 43,000