1. 1 | Page
TheA’z
CASH FLOW QUESTION
Q # 6- Cash Flow Statement:
Presented below is information related to M/s R Company. Use to prepare a Statement of Cash Flow:
Assets 2004 2003
Cash 54,000 37,000
Accounts Receivable 68,000 26,000
Inventories 54,000 -0-
Prepaid Expenses 4,000 6,000
Land 45,000 70,000
Buildings 200,000 200,000
Accumulated Depreciation- building (21,000) (11,000)
Equipment 193,000 68,000
Accumulated Depreciation-equipment (28,000) (10,000)
Liabilities and Stockholders’ Equity 2004 2003
Accounts payable 23,000 40,000
Accrued expense payable 10,000 -0-
Bonds payable 110,000 150,000
Common Stock ($ 1 par) 220,000 60,000
Retained earnings 206,000 136,000
Income Statement for the year 2004:
Sales Revenue $ 890,000
Cost of goods Sold 465,000
Operating Expense 221,000
Interest Expense 12,000
Loss on sale of equipment 2,000 700,000
Income from operation 190,000
Income Tax expenses 65,000
Net Income 125,000
Additional information:
a. Operating expenses including depreciation expense of $ 33,000 and charges from prepaid expenses of
42,000.
b. Land was sold at its book value for cash.
c. Cash dividend of $ 55,000 were declared and paid in 2004.
d. Interest expense of $ 12,000 was paid in cash.
e. Equipment with a cost of $ 166,000 was purchased for cash. Equipment with a cost of $ 41,000 and a
book value of $ 36,000 was sold for $ 34,000Cash.
f. Bonds of $ 10,000 were redeemed at their book value for Cash; bonds of $ 30,000 were converted into
common stock.
g. Common stock ($ 1par) of $ 130,000 was issued for cash.
h. Accounts payable pertain to merchandise supplies.
Required:
Prepare a Cash Flow Statement by Indirect Method with proper headings of Operating, Financing and
Investing Activities.

2. 2 | Page
TheA’z
JULY 2008
Q # 5 (a) Identify three factors that may causes net income to differ from net cash flow from operating
activities.
(b) The accounting staff of Carolina Crafts, Inc., has assembled the following information for the year
ended December 31, 1994.
Cash and cash equivalents, beginning of year…………………… $ 45,200
Cash and cash equivalents, end of year …………………………. 64,200
Cash paid to acquire plant assets ………………………………... 21,000
Proceeds from short-term borrowing ……………………………. 10,000
Loans to made borrowing ………………………………………… 5,000
Collections on loans (excluding interest) ………………………… 4,000
Interest and dividends received ………………………………….. 17,000
Cash received from customers …………………………………… 795,000
Proceeds from sales of plants assets …………………………….. 9,000
Dividends paid …………………………………………………… 65,000
Cash paid to suppliers and employees …………………………… 635,000
Interest paid ………………………………………………………. 19,000
Income tax paid ………………………………………………….... 71,000
Required
Prepare cash flow statement under the proper classification of operating activities, investing activities and
financing activities. Use direct method to calculate cash generated from operating activities.
DECEMBER 2009
Q # 3 The income statement and additional data of Naheed Milling Company follow:
NAHEED MILLING COMPA NY
INCOME STATEMENT
YEAR ENED SEPTEMBER 30, 2008
Revenues:
Sales Revenue ……………………………… Rs. 229,000
Dividend revenue ………………………….. 8,000 Rs. 237,000
Expenses:
Cost of goods sold …………………………. 103,000
Salaries expense …………………………… 45,000
Depreciation expense ……………………... 29,000
Advertising expense ………………………. 11,000
Interest expense …………………………… 2,000
Income tax expense ………………………. 9,000 Rs. 199,000
Net Income ……………………….. Rs. 38,000
Additional data:
a. Collections from customers are Rs. 7,000 more than sales.
b. Payments to supplies are Rs. 9,000 less than the sum of cost goods sold plus advertising expense.
c. Payments to employees are Rs. 1,000 more than salary expense.
d. Dividend revenue, interest expense, and income tax expense equal their cash amounts.
e. Acquisition of plant assets in Rs. 116,000. of this amount, Rs. 101,000 is paid in cash, Rs. 15,000 by
signing a note payable.
f. Proceeds from sale of land, Rs. 14,000

3. 3 | Page
TheA’z
g. Proceeds from issuance of common stock, Rs. 30,000
h. Payment of long-term note payable, Rs. 15,000
i. Payment of dividends, Rs. 11,000.
j. Increase in cash balance, Rs.?
Prepare Naheed Milling Company’s statement of each flows and accompanying schedule of non-cash
investing and financing activities. Report operating activities by the direct method.
JANUARY 2009
Q # 5 (a) Give two examples of cash receipts and two examples of cash payments that fit into each of
the following classifications: 4
(1) Operating activities.
(2) Investing activities.
(3) Financing activities
(b) The following data are taken from the income statement and balance sheet of Ali Night Pharmacies
Inc.:
Dec. 31 Jan. 1
2001 2001
Income statement:
Net income $ 4 00,000
Depreciation Expense 120,000
Amortization of Intangible Assets 40,000
Gain on sale on plant Assets 80,000
Loss on Sale of Investments 35,000
Balance Sheet:
Accounts Receivable $ 380,000
Inventory 575,000
Prepaid expenses 10,000
Accumulated payable (to merchandise suppliers) 410,000
Accrued Expenses Payable 155,000
Required:
Using this information prepare a partial statement of cash flows for the year ended December 21, 2001,
showing the computation of net cash flows from operating activities by the indirect method.
DECMBER 2010
Q # 4:The accounting staff of Carolina Crafts, Ins., has assembled the following information for the year
ended December 31, 2001.
Cash and cash equivalents, Jan. 1 $45200 Proceeds from sales of plant assets 9000
Cash and cash equivalent, Dec. 31 64200 Dividend paid 65000
Cash paid to acquire plant assets 21000 Cash paid to suppliers and employees 635000
Proceeds from short-term borrowing 10000 Interest paid 19000
Loans made to borrowers 5000 Income taxes paid 71000
Collections on loans(excluding interest) 4000 Cash received from customers 795000
Interest and dividends received 17000
Required: Prepare a statement of cash flows. Include a proper classification of categories of operating
activities, investing activities, and financing activities. Use direct method for net cash flow from
operating activities.

4. 4 | Page
TheA’z
JUNE 2011
Q # 1: At December 31, 2009 Kelso Imports reported this information on its balance sheet.
Accounts Receivable $600,000
Less: Allowance for doubtful accounts 40,000
During 2010 the company had the following transactions related to receivables.
1. Sales on account 2500,000
2. Sales return and allowance 40,000
3. Collections of account receivable 2200,000
4. Write-off of accounts receivable deemed uncollectible 45,000
5. Recovery of bad debts previously written off as uncollectible 15,000
Required:
1. Prepare the journal entries to record each of these five transactions. Assume that no cash discounts
were taken on the collections of accounts receivable.
2. Enter the January 1, 2010 balances in Accounts Receivable and Allowance for Doubtful Accounts, post
the entries to the two accounts (use T accounts), and determine the balances.
3. Prepare the journal entry to record bad debts expense for 2010, assuming that aging the accounts
receivable indicates that estimated bad debts are $46,000.
DECEMER 2011
Q # 5 The current sections of Kitselton Inc.’s balance sheets at December 31, 2009 and 2010, are
presented here. Kitselton’s net income for 2010 was $ 135,000. Depreciation expense was $ 34,000.
2010 2009
Current Assets
Cash $ 105,000 $ 99,000
Accounts Receivable 100,000 89,000
Inventory 168,000 172,000
Prepaid Expenses 27,000 22,000
Total current assets $ 400,000 $ 382,000
Current liabilities
Accrued expenses payable $ 15,000 $ 5,000
Accounts payable 85,000 92,000
Total current liabilities $ 100,000 $ 97,000
Required:
Prepare the net cash provided by operating activities section of the company’s statement of cash flow for
the year ended December 31, 2010, using the indirect method.
JUNE 2012
Q # 1 Trader Company’s 2010 income statement showed the following: Net Income $ 728,000;
Depreciation Expense $ 90,000; Amortization Expense $ 16,400; Gain on Sale of Plant Assets $ 14,000;
Loss on Sale of Furniture $ 5,000. An examination of the company’s current assets and current liabilities
showed that the following changes occurred because of operating activities: Accounts Receivable

5. 5 | Page
TheA’z
decreased $ 36,200; Merchandise Inventory decreased $ 104,000; prepaid expenses increased $ 7,400;
Accounts Payable decreased $ 18,400; other payable increased $ 2,800.
Required:
Use the indirect method to calculate the cash flow from operating activities.
DECEMBER 2012
Q # 4 CASH FLOWS FROM OPERATING ACTIVITIES:
The following are the analyzed data obtained from Adam Company’s record on June 30, 2012
Net Income Rs. 65,000
Increase in accounts receivable 30,000
Depreciation expense 40,000
Increase in prepayments 3,000
Decrease in accrued liabilities 6,000
Increase in accounts payable 15,000
Decrease in accrued interest receivable 1,000
Non-operating gain on sales of plant assets 31,000
Increase in accrued liabilities for income taxes and interest payable 5,000
Non-operating loss on sale of marketable securities 4,000
Increase in inventory 10,000
Required:
Prepare a schedule showing net cash flow from operating activities.
JULY 2013
Q # 4 The following staff of Carolina Craft Inc. has assembled the following information for the year
ended December 31, 2012
Cash received from customers Rs 795,000
Proceeds from sale of plant assets 9,000
Interest paid 19,000
Cash paid to acquire plant assets 21,000
Interest and dividends received 17,000
Income tax paid 71,000
Proceeds from short-term borrowing 10,000
Loans made to borrows 5,000
Collection on loans (excluding interest) 4,000
Dividend paid 65,000
Cash paid to suppliers and employees 635,000
Cash and Cash equivalents, Jan. 1 45,200
Cash and Cash equivalents, Dec 31 64,200
Required:
Prepare Cash flow Statement under Direct Method.

6. 6 | Page
TheA’z
DECEMBER 2013
Q # 5 The following data are taken from the financial statements of Hasan Co. at the year ended June
30, 2012.
Net income……………………………………………………. Rs 750,000.
Depreciation expense……………………………………… Rs 300,000.
During the year:
Account receivable increased by……………………….. Rs 310,000.
Notes payable to suppliers increased by………….... Rs 46,000.
Increase in Inventory…………………………………….… Rs 60,000.
Increase in Account Payable……………………………. Rs 360,000.
Increase in Prepaid expenses…………………………… Rs 130,000.
Decrease in Accrued Liabilities…………………………. Rs 226,000.
Required:
Determine properly Cash Flow from Operating Activities.
JUNE 2014
Q # 1 Presented below is information related to Arthur Company. Prepare cash flow statement using the
indirect method.
Arthur Company
Comparative Balance Sheet
December 2012
2012 2011
Assets
Cash 54,000 37,000
Accounts Receivable 68,000 26,000
Inventories 54,000 -
Prepaid Expenses 4,000 6,000
Land 45,000 70,000
Building 200,000 200,000
Accumulated depreciation - building (21,000) (11,000)
Equipment 193,000 68,000
Accumulated depreciation – equipment (28,000) (10,000)
Total 569,000 386,000
Liabilities and Stockholder's Equity
Accounts Payable 23,000 40,000
Accrued Expenses Payable 10,000 0
Bonds Payable 110,000 150,000
Common Stock (Rs 1 Par) 220,000 60,000
Retained Earnings 206,000 136,000
Total 569,000 386,000
Arthur Company
Income Statement

7. 7 | Page
TheA’z
For the Year Ended December 31, 2012
Revenues 890,000
Cost of Goods Sold 465,000
Operating Expenses 221,000
Interest Expenses 12,000
Loss on sale of equipment 2,000 700,000
Income before Income Taxes 190,000
Income Tax Expense 65,000
Net Income 125,000
Additional Information:
1. Operating expenses include depreciation expense of Rs 33,000 and charges from prepaid expenses Rs
2,000. Interest Expense of Rs 12,000 was paid in cash.
2. Land was sold at its book value for cash.
3. Cash dividends of Rs 55,000 were declared and paid in 2012.
4. Equipment with a cost of Rs 166,000 was purchased for cash.
5. Equipment with a cost of Rs 41,000 and a book value of Rs 36,000 was sold for Rs 34,000 cash.
6. Bonds of Rs 10,000 were redeemed at their book value for cash. Bonds of Rs 30,000 were converted
into common stock.
7. Common stock (Rs 1 par) of Rs 130,000 was issued for cash.
JUNE 2015
Q # 1 On the basis of the following data for Teller Co. for 2008 and the preceding year ended December
31, 2008, prepare a statement of cash flows. Use the indirect method of reporting cash flows from
operating activities. Assume that equipment costing Rs 125,000 was purchased for cash and equipment
costing Rs 85,000 with accumulated depreciation of Rs 65,000 was sold for Rs 15,000; that the stock was
issued for cash; and that the only entries in the retained earnings account were net income of Rs 51,000
and cash dividends declared of Rs 13,000.
Year Year
2008 2007
Cash Rs 100,000 Rs 78,000
Accounts receivable (net) 78,000 85,000
Inventories 101,500 90,000
Equipment 410,000 370,000
Accumulated depreciation (150,000) (158,000)
Rs 539,500 Rs 465,000
Accounts payable (merchandise creditors) Rs 58,500 Rs 55,000
Cash dividends payable 5,000 4,000
Common stock, Rs 10 par 200,000 170,000
Paid-in capital in excess of par-- common stock 62,000 60,000
Retained earnings 214,000 176,000
Rs 539,500 Rs 465,000