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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Grand Hospitality Ltd. reported Net Profit after Tax of ₹6,40,000 for the year ended 31st March, 2025. The relevant extract from the Balance Sheet as at 31st March, 2025 is:
| Particulars | 31st March, 2025 (₹) | 31st March, 2024 (₹) |
|---|---|---|
| Inventories | 1,15,000 | 1,25,000 |
| Trade Receivables | 1,50,000 | 1,10,000 |
| Prepaid Expenses | 20,000 | 6,000 |
| Trade Payables | 1,10,000 | 80,000 |
| Provision for Tax | 20,000 | 15,000 |
Depreciation charged on Plant and Machinery ₹55,000, Insurance Claim received ₹50,000, and Gain (Profit) on Sale of Investment ₹20,000 appeared in the Statement of Profit and Loss for the year ended 31st March, 2025. Calculate Cash Flow from Operating Activities.
Cash Flow from Operating Activities
| Particulars | Amount (₹) | Amount (₹) |
|---|---|---|
| Profit as per Statement of Profit and Loss (given as Net Profit after Tax) | 6,40,000 | |
| Add: Provision for Tax (closing balance, this year’s charge) | 20,000 | |
| Less: Extraordinary Item — Insurance Claim Received | (50,000) | |
| Profit before Tax and Extraordinary Items | 6,10,000 | |
| Add: Depreciation on Plant and Machinery | 55,000 | |
| 6,65,000 | ||
| Less: Gain on Sale of Investments | (20,000) | |
| Operating Profit before Working Capital Changes | 6,45,000 | |
| Add: Increase in Current Liabilities — Trade Payables (1,10,000 − 80,000) | 30,000 | |
| Add: Decrease in Current Assets — Inventories (1,25,000 − 1,15,000) | 10,000 | 40,000 |
| 6,85,000 | ||
| Less: Increase in Current Assets — Trade Receivables (1,50,000 − 1,10,000) | (40,000) | |
| Less: Increase in Current Assets — Prepaid Expenses (20,000 − 6,000) | (14,000) | (54,000) |
| Cash Generated from Operations (before Tax and Extraordinary Items) | 6,31,000 | |
| Less: Tax Paid (opening Provision for Tax, assumed paid during the year) | (15,000) | |
| Cash Flow from Operating Activities after Tax | 6,16,000 | |
| Add: Extraordinary Item — Insurance Claim Received | 50,000 | |
| Net Cash Flow from Operating Activities | 6,66,000 | |
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.16 - Cash Flow Statement", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 5 - Cash Flow Statement.
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