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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
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.
Cash Flow from Operating Activities
| Particulars | Amount (₹) | Amount (₹) |
|---|---|---|
| Profit as per Statement of Profit and Loss | 1,00,000 | |
| Add: Transfer to General Reserve | 30,000 | |
| Net Profit before Tax | 1,30,000 | |
| Items to be Added: | ||
| Depreciation | 20,000 | |
| Goodwill Amortised | 7,000 | |
| Items to be Deducted: | ||
| Gain on Sale of Machinery | (3,000) | 24,000 |
| Operating Profit before Working Capital Changes | 1,54,000 | |
| Less: Increase in Current Assets | ||
| Prepaid Expenses | (200) | |
| Trade Receivables | (3,000) | |
| Less: Decrease in Current Liabilities | ||
| Outstanding Expenses | (2,000) | |
| Add: Increase in Current Liabilities | ||
| Trade Payables | 6,000 | 800 |
| Net Cash Flow from Operating Activities | 1,54,800 |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 3 Chapter 5 Q.14 - Cash Flow Statement", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 5 - Cash Flow Statement.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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