State any two objectives of a cash flow statement.
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Solution and Explanation
1. Assessing liquidity and cash position: It provides information about the inflows and outflows of cash and cash equivalents, helping to evaluate the company's liquidity.
2. Evaluating cash-based performance: It helps stakeholders understand how the company generates and uses cash through operating, investing, and financing activities.
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From the following information, prepare Cash Flow Statement from the operating activities:
Items Rs. Net profit of current year 1,00,000 Transfer to general reserve 10,000 Decrease in debtors 25,000 Decrease in bills payable 20,000 Discount on shares written off 5,000 Increase in stock 18,000 Loss on sale of machine 12,000 Profit on sale of investment 4,000
\[ \text{Cash Flow from Operating Activities} \] \[ \begin{array}{|l|r|} \hline \textbf{Particulars} & \textbf{Rs.} \\ \hline \text{Net Profit before Adjustments} & 1,00,000 \\ \hline \text{Add: Decrease in Debtors} & 25,000 \\ \text{Add: Profit on Sale of Investment} & 4,000 \\ \hline \text{Less: Transfer to General Reserve} & (10,000) \\ \text{Less: Decrease in Bills Payable} & (20,000) \\ \text{Less: Discount on Shares Written Off} & (5,000) \\ \text{Less: Increase in Stock} & (18,000) \\ \text{Less: Loss on Sale of Machine} & (12,000) \\ \hline \text{Net Cash Flow from Operating Activities} & 64,000 \\ \hline \end{array} \]- Which accounting standard is related to cash flow statement?
The following is the position of current assets and current liabilities of Z Ltd.:
\[\begin{array}{|l|r|r|} \hline Items & March, 2022 (Rs.) & March, 2023 (Rs.) \\ \hline \text{Provision for doubtful debts} & \text{1,000} & \text{--} \\ \hline \text{Short-term loans} & \text{10,000} & \text{19,000} \\ \hline \text{Creditors} & \text{15,000} & \text{10,000} \\ \hline \text{Bills payable} & \text{20,000} & \text{40,000} \\ \hline \end{array}\]
The company incurred a loss of Rs. 45,000 during the year. Calculate cash from operating activities.
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