T.S. Grewal Class 12 Vol 3 Chapter 5 Q.13 - Cash Flow Statement

Question 13

Calculate Cash Flow from Operating Activities from the following:

(i) Profit for the year is ₹7,00,000 after considering the following items:

Particulars	Amount (₹)
Depreciation on Fixed Assets	40,000
Goodwill Amortised	20,000
Gain on Sale of Land	90,000
Appropriation of Profit towards General Reserve	60,000

(ii) Following is the position of Current Assets and Current Liabilities:

Particulars	Closing Balance (₹)	Opening Balance (₹)
Trade Payables	50,000	75,000
Trade Receivables	75,000	60,000
Prepaid Expenses	10,000	18,000

Solution

Cash Flow from Operating Activities

Particulars	Amount (₹)	Amount (₹)
Profit as per Statement of Profit and Loss		7,00,000
Add: Transfer to General Reserve		60,000
Profit before Tax and Extraordinary Items		7,60,000
Items to be Added:
Depreciation on Fixed Assets	40,000
Goodwill Amortised	20,000	60,000
		8,20,000
Items to be Deducted:
Gain on Sale of Land		(90,000)
Operating Profit before Working Capital Changes		7,30,000
Add: Decrease in Current Assets — Prepaid Expenses (18,000 − 10,000)		8,000
		7,38,000
Less: Decrease in Current Liabilities — Trade Payables (75,000 − 50,000)	(25,000)
Less: Increase in Current Assets — Trade Receivables (75,000 − 60,000)	(15,000)	(40,000)
Net Cash Flow from Operating Activities		6,98,000