Question

From the following summary of Cash Account of Kedia Ltd. prepare Cash Flow Statement for the year ended 31st March, 2025 using the direct method:

Receipts	Amount (Rs.)	Payments	Amount (Rs.)
Balance on 31st March, 2024	5,000	Payments to suppliers	50,000
Issue of equity shares	10,000	Purchase of fixed assets	60,000
Receipts from customers	1,50,000	Overhead expenses	3,000
Sale of fixed assets	33,000	Wages and salaries	15,000
		Taxation	10,000
		Dividend	5,000
		Payment of bank loan	35,000
		Balance on 31st March, 2025	20,000
Total	1,98,000	Total	1,98,000

Hint:

Classify items into Operating/Investing/Financing; the three net totals must reconcile opening to closing cash balance.

Answer 1

Step 1: Classify each receipt/payment under Operating, Investing, or Financing:
Operating: receipts from customers, payments to suppliers, overhead expenses, wages & salaries, taxation.
Investing: sale of fixed assets, purchase of fixed assets.
Financing: issue of equity shares, payment of bank loan, dividend paid.

Step 2: Compute Cash Flow from Operating Activities:

Cash receipts from customers	1,50,000
Less: Cash paid to suppliers	(50,000)
Less: Overhead expenses	(3,000)
Less: Wages and salaries	(15,000)
Cash generated from operations	82,000
Less: Tax paid	(10,000)
Net Cash from Operating Activities	72,000

Step 3: Compute Cash Flow from Investing Activities:

Sale of fixed assets	33,000
Purchase of fixed assets	(60,000)
Net Cash used in Investing Activities	(27,000)

Step 4: Compute Cash Flow from Financing Activities:

Issue of equity shares	10,000
Payment of bank loan	(35,000)
Dividend paid	(5,000)
Net Cash used in Financing Activities	(30,000)

Step 5: Reconcile opening and closing balance:
Net increase in cash = 72,000 − 27,000 − 30,000 = Rs. 15,000.
Add: Opening cash balance (31 March 2024) = Rs. 5,000.
Closing cash balance = 15,000 + 5,000 = Rs. 20,000, which exactly matches the given closing balance — confirming the statement is correct.

Final Answer:
Net Cash from Operating Activities = Rs. 72,000; Net Cash used in Investing Activities = Rs. (27,000); Net Cash used in Financing Activities = Rs. (30,000); Net increase in cash = \[ \boxed{Rs.\ 15{,}000} \], taking the balance from Rs. 5,000 to Rs. 20,000.