1. Fund Flow Statement, Cash Flow Statement
1A .Calculate Fund From Operations
I. Profit & Loss A/c
Particulars Amount
(Rs.)
Particulars Amount
(Rs.)
Depreciation 900 Gross profit 8500
Discount on Issue of Shares 200 Profit on sale of Land 4,000
Loss on Sale of Machinery 400 Income Tax Refund 4,000
Goodwill Written off 2,200
Preliminary Expenses 650
Business Expenses 1,500
Provision For Tax 5,000
To Net Profit 5,650
16,500 16,500
Salaries 60,000 Gross Profit 150,000
Rent 22,500 Profit on sale of Bldg. 7,500
Provision for Bad Debts 7,500
Discount 2,000
Preliminary Expenses written off 15,000 Interest on Investments 3,000
Goodwill written off 7,500
Depreciation on Machinery 7,500
Loss on sale of Plant
Book
Balance 15,000
Sold for 12,000 3,000
Provision for taxation 7,500
Net Profit 28,000
160,500 160,500
1B. The following information was provided by Manju Plastic Manufacturing Ltd.
for year ending 31st March 2004
Sales 20,00,000
Opearing Expenses(excluding Depreciation) (14,00,000)
Depreciation (2,00,000)
Net Profit before Tax 4,00,000
Extraordinary Income gain on Speculation 1,00,000
Profit Before Tax 5,00,000
Provision for Tax @ 40% 2,00,000
Net Prfoit After Taxes 3,00,000
Additional Information
Included in operating is loss on sale of Machinery Rs 40,000

2. Actual Taxes paid in respect of 2003-2004 Rs 1,80,000
Following are the balances of Current tiems:
31.3.2003 31.3.2004
Trade Debtors 1,60,000 1,20,000
Inventories 1,30,000 1,40,000
Trade Creditors 1,80,000 1,70,000
You are Required to calculate Cash Flow from Operating Activities.
2. For each of the following items state how it should be reported in cash flow
statement for the year:
a) Issue of 20,000 equity shares of Rs 10 each at premium of RS 4 per share
b) Redemption of Debentures Rs 40000 at Discouunt of 10%
c) Profit of last year Rs 10000 and Loss of Current Year RS 35000
d) Loss of last year Rs 28000 and profit of current year Rs 24000
e) Loss of last Year Rs 10000 and loss of current year Rs 38000
f) Loss of last Year Rs 280000 and loss of current year Rs 100000
g) Purchase of equipment of Rs 4,85,000
h) Sale of old equipment for Rs 87,000 (book Value RS 98,000)
i) Declared and paid dividend of RS 1,25,000
j) Received interest on Investments RS 18,000
2. THE balance in Equipment account and accumulated Depreciation a/c as on
March 31 2002 and 2003 are given below:
March 31,2002 March 31,2003
Equipment (as on 1.4.2002) 65,00,000 78,70,000
Accumulated depreciation (as on 1.4.2002) 10,80,000 16,32,000
The equipment costing RS 12,30,000 accumulated depreciation thereon Rs 7,18,000
was sold for RS 4,68,000. Compute the amount of equipment purchased,
depreciation charged for the year and loss on sale of equipment. Also show how
each of the item related to euipment will be reported in statement of cash flows.
3. X Ltd. Made a profit of RS 1,00,000 after charging depreciation of Rs 20,000 on
assets and transfer to General Reserve of Rs 30,000. The goodwill written off was Rs
7,000 and the gain on sale of Machinery was Rs 3,000. The other information
available are :
At the end of year, debtors showed a increase of R 6,000, Creditors an increase of
RS 10,000, prepaid expenses and increase of Rs 200 bills payable a decrease of Rs
4,000 and outstanding expenses decrease of RS 2,000.
Ascertain the cash flow from operating activities.
4. X Ltd. provides you the following information :
Plant And Machinery (as on 1.4.2002) 850,000
Plant And Machinery (as on 31.3.2003) 932,000
Accumulated depreciation (as on 1.4.2002) 425,000
Accumulated depreciation (as on 31.3.2003) 440,000

3. During the year the company provided depreciation amounting to Rs 80,000 and a
machine costing Rs 1,05,000 was sold at profit of 20% on book value. Calculate
amount of sources and application of funds.
5. Prepare Cash Flow statement
I
Liabilities 2001 2002 Assets 2001 2002
Equity Share Capital 500,000 600,000 Fixed Assets 1,000,000 1,120,000
Reserves & Surplus 150,000 180,000 Less : Accumulated
Dep.
(370,000) (460,000)
Profit & Loss a/c 40,000 65,000 630,000 660,000
Debentures 300,000 250,000 Stock 240,000 370,000
Creditors for Goods 170,000 160,000 Books Debts 250,000 230,000
Provision for Tax 60,000 80,000 Cash in hand 80,000 60,000
Preliminary Expenses 20,000 15,000
1,220,000 1,335,000 1,220,000 1,335,000
Profit & Loss Appropriation A/c for 31.3.2002
Particulars Particulars
To Transfer to Reserves 30,000 By Balance B/d 40,000
To Dividend Paid 80,000 By Net Profit 135,000
To Balance c/d 65,000
175,000 175,000
II
2001 2002 2001 2002
Equity Share Capital 30,000 35,000 Goodwill 10,000 8,000
General reserve 10,000 15,000 Machinery 41,000 54,000
Profit And Loss A/c 6,000 7,000 10% Investments 3,000 8,000
10% Debentures 15,000 25,000 Stock 4,000 5,500
Sundry Creditors 7,500 11,000 Debtors 8,000 19,000
Bills Payable 1,000 1,500 Cash & Bank Balance 12,000 13,000
Provision for Deprec-
Discount on
-iation On Machine 9,000 13,000
Debentures 500 -
78,500 107,500 78,500 107,500
Additional Information: Investments costing Rs 3000 were sold for RS 2800 during
the year. A new machine was purchased for Rs 13000.
III
2001 2002 2001 2002
Equity Share Capital 90,000 130,000 Plant (Gross) 160,000 165,000
Retained Earnings 60,000 96,000 Accumulated Depreciation 30,000 38,000
Long Term Loans 70,000 50,000 Plant (Net) 130,000 127,000
Proposed Dividend 8,000 10,000 Patents - 29,000
Accounts Payable 40,000 30,000 Stock 80,000 90,000

4. Notes Payable 32,000 19,000 Debtors 60,000 55,000
Prepaid Expenses 10,000 12,000
Cash 20,000 22,000
300,000 335,000 300,000 335,000
Profit & Loss A/c for year ending 31.3.2002
Raw Material Consumed 200,000
Sale
s 375,000
Wages Paid 40,000
Expenses(Including interest 7000) 80,000
Depreciation 8,000
Patents Amortized 1,000
Gross Profit c/f 46,000
375,000 375,000
Proposed Dividend 10,000 Gross Profit 46,000
Profit Retained 36,000
46,000 46,000
IV.
10% dividend paid in cash.
New machinery for Rs 30,000 was purchased, but old machinery costing Rs 12,000
was sold for Rs 4,000. Accumulated Depreciation was Rs 6,000.
8% Debentures amounting to Rs 20,000 were redeemed by purchase from open
market @ Rs 96 for a debenture of Rs 100.
Investments worth Rs 36,000 were sold for Rs 38,000. Prepare Statement of change
in working Capital and Funds Flow Statement.
Liabilities 1.1.94 31.12.94 Assets 1.1.94 31.12.94
Sundry Creditors 103,000 96,000 Cash & Bank
Balance
90,000 90,000
Outstanding
Expenses
13,000 12,000 Sundry Debtors 67,000 43,000
8% Debentures 90,000 70,000 Short Term
Investment
110,000 74,000
Depreciation Funds 40,000 44,000 Prepaid Expenses 1,000 2,000
Reserves 60,000 60,000 Stock in Trade 82,000 106,000
Profit & Loss A/c 16,000 23,000 Land & Building 150,000 150,000
Capital 230,000 230,000 Machinery 52,000 70,000
552,000 535,00000 552,000 535,000
V
Liabilities 1.1.2002 31.12.2002 Assets 1.1.2002 31.12.2002
Creditors 40,000 44,000 Cash 10,000 7,000
Loan from Amit 25,000 - Debtors 30,000 50,000
Loan from Bank 40,000 50,000 Stock 35,000 25,000
Capital 125,000 153,000 Machinery 80,000 55,000
Land And Building 75,000 110,000

5. 230,000 247,000 230,000 247,000
(a) During the year Machine costing Rs 10,000 (accumulated depreciation RS
3000) was sold for Rs 5000
(b) The provision for Depreciation against Machinery as on 1.1.2002 was Rs 25000
and on 31.12.2002 was Rs 40000.
(c) Profit for the year 2002 amounted to Rs 45000.

6. 1. From the following compute Cash From operations
Profit & Loss A/c
Particulars Amount (Rs.) Particulars Amount (Rs.)
To Opening Stock 8,000 By Sales 3,00,000
To Purchases 2,32,000 By Closing Stock 15,000
To Gross Profit 75,000
315,000 315,000
Other Information As on 31.12.93 As on 31.12.94
Debtors 12,000 5,000
Creditors 8,000 14,000
(II)
31.3.94 31.3.95 31.3.94 31.3.95
Balance of P&
L A/c
60,000 55,000 Development
Rebate Reserve
7,03,000 7,25,000
Balance of
Debtors
87,000 50,000 Salary
outstanding
30,000 12,000
Balance of B/R 62,000 1,03,000 Prepaid Wages 5,000 7,000
General
Reserve
2,02,000 2,37,000 Goodwill 80,000 70,000
(III)
31.3.94 31.3.95 31.3.94 31.3.95
Profit and Loss
Appropriation
A/c
20,000 30,000 Provision for
Depreciation
7,03,000 7,25,000
Prepaid
Insurance
1,400 1,200 Outstanding Rent 1,600 4,000
Balance of B/R 14,000 18,000 Stock 14,000 16,000
Goodwill 20,000 16,000 Accrued Income 6,000 7,000
(IV) Profit & Loss A/c
Particulars Amount (Rs.) Particulars Amount (Rs.)
To Salary 15,000 Gross profit 45,000
Rent 10,000 Profit on sale of Land 4,000
Depreciation 2,000 Income Tax Refund 4,000
Loss on sale of Plant 1,000
Goodwill Written off 4,000
Proposed Dividend 5,000
Provision For Tax 5,000
To Gross Profit 11,000
53,000 53,000

7. 2. From the following particulars compute Funds from operations
(I) Particulars As on As on
31.3.94 31.3.95
Profit & Loss Appropriation A/c 30,000 40,000
General Reserve 20,000 25,000
Goodwill 10,000 5,000
Preliminary Expenses 6,000 4,000
Provision for Depreciation 10,000 12,000
(II)
Profit on sale of land 25,000
Provision for Bad Debts 12,000
Amortisation of Goodwill 8,000
Depreciation on Machinery 16,000
Net Loss 3,200
Loss on Sale of building 13,000
Provision for Bad debts 2,000
(III)
Net Profit 1,85,720
Salaries 8,000
Depreciation written off 15,300
Transfer to Debenture Redemption Funds 20,000
Discount on issue of Debentures written off 20,000
Preliminary Expenses written off 8,000
Proposed Dividend 50,000
Profit on sale of Fixed Assets 14,000
Loss on sale of investments 2,000
Dividend Recd. 4,500
(IV)
Net Profit for the year 1994 15,000
Profit on Sale of Land 25,000
Provision for depreciation :
in beginning of the year 26,000
at the end of the year 20,500
Transfer to General Reserve 2,000
Goodwill written off 5,000
4. From the following Balance Sheet, make the Statement if Changes in Working
Capital and Funds Flow Statement:
Liabilities 1993 1994 Assets 1993 1994
Share Capital 300,000 400,000 Goodwill 100,000 80,000
10% Redeemable
Preference Share
150,000
100,000
Capital
Land & Building 200,000 170,000
Capital Reserve 10,000 20,000 Plant & Machinery 80,000 200,000

8. General Reserve 30,000 50,000 Investment 20,000 30,000
Profit & Loss A/c 30,000 48,000 Sundry Debtors 140,000 170,000
Proposed Dividend 42,000 50,000 Stock 77,000 109,000
Sundry Creditors 25,000 47,000 Bills Receivable 20,000 30,000
Bills Payable 20,000 16,000 Cash in Hand 15,000 10,000
Outstanding
Expenses
30,000
36,000
Cash at Bank 10,000 8,000
Provision for Tax 40,000 50,000 Preliminary
Expenses
15,000 10,000
677,000 817,000 677,000 817,000
Additional Information :
a) A piece of land has been sold out in 1994 and profit on sale has been
capitalised to Capital reserve a/c.
b) A machine has been sold out for Rs 10,000. The written Down Value of
machine was Rs 12,000. Depreciation of Rs 10,000 is charged on Plant A/c in
1994.
c) The Investments are Trade Investments. A sum of Rs 3,000 is recd. by way of
dividend.
d) An interim dividend of Rs 20,000 has bee paid in 1994.
5. From the summarized Balance Sheet of A Ltd. as on 31.12.94 and 1995
prepare Funds Flow Statement.
Liabilities 1994 1995 Assets 1994 1995
Share Capital 900,000 900,000 Fixed Assets 800,000 640,000
General Reserve 600,000 620,000 Investments 100,000 120,000
P/L Account 112,000 136,000 Stock 480,000 420,000
Creditors 336,000 268,000 Debtors 420,000 910,000
Provision for Tax 150,000 20,000 Bank 298,000 94,000
Loan - 540,000
2,098,000 2,484,000 2,098,000 2,184,000
Additional Information :
a) Investment costing Rs 16,000 were sold during the year 1995 for Rs 17,000
b) Provision For Taxation made during the year was Rs 18,000
c) During the year, part of fixed Assets costing Rs 20,000were sold for Rs
24,000. He profit included in Profit and Loss a/c.
d) Dividend paid during the year amounted to Rs 80,000.
Prepare a Cash Flow Statement for 1995 from the following Information
(A) Income Statement for 1995
Sales 1,000,000
Less : Cost Of sales (Including Depreciation Rs 10,000) 750,000
Gross Profit 250,000
Less : Selling & Distribution 50,000

9. Expenses
Other Expenses 25,000
Interest on Loan 5,000
80,000
170,000
Balance Sheet 1994 1995
ASSETS
Cash in Hand and at Bank 75,000 65,000
Investments 25,000 75,000
Debtors 200,000 150,000
Stock 325,000 400,000
Plant & Equipment 1,250,000 1,490,000
1,875,000 2,180,000
Liabilities
Creditors 275,000 225,000
Outstanding
25,000 10,000
Expenses
Provision for Depreciation 40,000 50,000
Loans 75,000 125,000
Share Capital 860,000 1,000,000
Reserves 600,000 770,000
1,875,000 2,180,000
Q. 8
I. During the year 2002 AB LTD. earned a profit of Rs 1,75,720 after adjusting
following:
Depreciation written off as follows Plant Rs 12,800 and Furniture RS 2,500
Profit on sale of Plant Rs 15,000
Discount on issue of Debentures written off Rs 20,000
Investment costing Rs 30,000 sold for Rs 28,000
Preliminary expenses appear in books Rs 40,000; out of which 20% has been written
off.
Proposed Dividend Rs 50000
Dividend Received Rs 20000
II. Net Profit for the year RS 1,50,000, Profit on sale of land Rs 50,000, Goodwill
written off Rs 10,000 Transfer to General Reserve Rs 4,000. Depreciation Provision
on Machine :
Beginning of year Rs 52,000,
End of year Rs 41,000.
In addition a machine costing Rs 40,000(accumulated Depreciation Rs 17,000) was
sold for Rs 23,000 during the year.

10. III Prepare A schedule of changes in working capital and Statement of Flow of
funds :
Liabilities 2001 2002 Assets 2001 2002
Share Capital 80,000 120,000 Goodwill 20,000 16,000
11% Preference Shares Land & Building 40,000 20,000
(Redeemable) 40,000 20,000 Plant & Machinery 36,000 76,400
General Reserve 8,000 12,000 Investments (Long Term) 4,000 14,000
Profit & Loss A/c 7,200 10,800 Sundry Debtors 30,000 43,200
Proposed Dividend 11,200 15,600 Stock 34,000 31,200
Bills Payable 14,000 21,200 Cash in Hand 6,800 11,200
Outstanding Expenses 3,200 2,400 Preliminary Expenses 4,000 2,800
Provision for Tax 11,200 12,800
174,800 214,800 174,800 214,800
IV
Liabilities 2001 2002 Assets 2001 2002
Equity Share Capital 150,000 200,000 Furniture 50,000 60,000
Securities Premium - 5,000 Less : Depreciation (28,000) (34,000)
General Reserve 50,000 60,000 22,000 26,000
Profit & Loss A/c 20,000 35,000 Goodwill 10,000 8,000
Debentures 100,000 75,000 Long Term Investment 40,000 52,000
Bills Payable 25,000 20,000 Accounts Receivable 254,000 289,000
Accounts Payable 35,000 40,000 Stock 31,000 28,000
Outstanding Expenses 2,000 1,000 Cash in Hand 22,000 31,000
Discount on Debentures 3,000 2,000
382,000 436,000 382,000 436,000
V
Liabilities 2001 2002 Assets 2001 2002
Equity Share Capital 600,000 600,000 Goodwill 72,000 72,000
General Reserve 104,000 108,000 Land 240,000 216,000
Profit & Loss A/c 76,000 78,000 Building 222,000 216,000
Accounts Payable 48,000 32,400 Short Term Investments 60,000 66,000
Short Term Loan 7,200 4,800 Stock on Hand 180,000 140,000
Provision for Tax 96,000 108,000 Accounts Receivable 120,000 133,600
Provision for Doubtful
2,400 3,600 Cash at Bank 39,600 91,200
Debts
933,600 934,800 933,600 934,800
A piece of land has been sold for RS 24000. Depreciation of Rs 42000 had been
charged to Building. An Interim Dividend of Rs 30,000 paid during the year.
VI.
Liabilities 2002 2003 Assets 2002 2003
Equity Share Capital 500,000 700,000 Land & Building 80,000 120,000
Profit & Loss A/c 100,000 160,000 Plant & Machinery 500,000 800,000
General Reserve 50,000 70,000 Stock on Hand 100,000 75,000
Accounts Payable 153,000 190,000 Accounts Receivable 150,000 160,000

11. Bills Payable 40,000 50,000 Cash at Bank 20,000 20,000
Outstanding
7,000 5,000
Expenses
850,000 1,175,000 850,000 1,175,000
Rs 50,000 Depreciation has been charged to Plant And Machinery during 2003
A piece of machinery was sold for Rs 8,000 during 2003. It had cost of Rs 12,000
depreciation of Rs 7,000 had been provided on it.