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NCERT Solutions for Class 12 Accountancy Chapter 6 Cash Flow Statement

NCERT Solutions

Class 12

Accountancy Company Accounts And Analysis Of Financial Statements

Chapter 6 Cash Flow Statement

Last updated date: 27th Jul 2024

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NCERT Solutions for Chapter 6 Cash Flow Statement Format Class 12 - FREE PDF Download

Vedantu’s NCERT Solutions for Accountancy Chapter 6 - Cash Flow Statement Class 12 according to the latest CBSE Class 12 Accountancy syllabus explores the preparation and analysis of cash flow statements, an essential part of financial accounting.

Table of Content

1. NCERT Solutions for Chapter 6 Cash Flow Statement Format Class 12 - FREE PDF Download

2. Glance on NCERT Solutions for Class 12 Accountancy Chapter 6 - Cash Flow Statement

3. Access NCERT Solutions for Class 12 Accountancy Chapter 6 – Cash Flow Statement

4. Topics Covered in Chapter 6 Accountancy Class 12 - Cash Flow Statement

5. Benefits of NCERT Solutions for Class 12 Accountancy Chapter 6 – Cash Flow Statement

6. NCERT Solutions for Class 12 Accountancy- Other Chapter-wise Links for FREE PDF

7. Related Important Links For Class 12 Accountancy Part II

FAQs

These solutions of cash flow statement format class 12 help students understand the format and components of cash flow statements, including operating, investing, and financing activities. The Class 12 Accountancy NCERT Solutions offers clear, step-by-step explanations, prepared by Vedantu’s Master teachers to help students understand the concepts.

Glance on NCERT Solutions for Class 12 Accountancy Chapter 6 - Cash Flow Statement

Cash Flow Statement Questions With Solutions involves the preparation of cash flow statements, understanding cash inflows and outflows, and classification into operating, investing, and financing activities.
This chapter explores the crucial concepts of cash flow statements, which are important for assessing a company's financial health.
It explains the classification of cash flows into three main activities: operating, investing, and financing.
Cash Flow Statement Questions include the primary revenue-generating activities of the business, such as cash receipts from sales and cash payments to suppliers and employees.
This chapter also focuses on cash flows from transactions with the company's owners and creditors, like issuing shares or repaying loans.

Related Chapters

Accounting for Share Capital

Issue and Redemption of Debentures

Financial Statements of a Company

Analysis of Financial Statements

Accounting Ratios

Access NCERT Solutions for Class 12 Accountancy Chapter 6 – Cash Flow Statement

Question 1 : What is a Cash Flow Statement?

Answer: A cash flow statement is a statement that shows the inflow and the outflow of the cash and the cash equivalents from the operating, financing, and investing activities of the company. It records the receipts and the payments of the cash and the cash equivalents that any business incurs during the particular accounting year. The statement of the cash flow helps to establish the ability and the position of the business to generate cash for its varying needs.

Question 2 : How are the various activities classified (as per AS-3 revised) while preparing cash flow statements?

Answer: As per AS-3 the following are the various activities classified while preparing a cash flow statement: Operating activity – Operating Activity includes all the activities that create and generate revenue for any business. For example, a company dealing with the garments will have its operating activity in the form of procurement of the raw materials, expenses made for manufacturing the garments, etc.

Investing activity – This includes all the transactions that are related to the long-term investments made by the company. Examples of this can include the sale and purchase of the fixed asset such as plants and Machinery. Financing activities – The financing activity includes all the transactions that are related to the acquiring of capital or long-term funds for any business. Examples of this can be the cash proceeds by the business from the issue of the equity shares and debentures etc.

Question 3: State the Objective of the cash flow statement.

Answer: The uses of the cash flow statement are as follows:

Cash flow statement is useful in providing information about the changes in the financial structure and the net assets and the amount which is generated with the inflows of the cash.
Cash flows are useful in providing information about the cash-generating capacity of the business by indicating the position of the business in terms of the cash and the cash equivalents.
Cash flows help the business to make comparisons about the operating performance of the business as the accounting treatments and practices might be different in the different enterprises and the cash flow statement will thus help the businesses to determine the cash generating capacity of them.
The cash flow records the transactions at their historical cost which can help the users to determine important information about the transactions as and when they require.

Question 4: What are the objectives of preparing a cash flow statement?

Answer: The objectives of the preparation of the cash flow statement are as follows:

The cash flow statement is helpful for the management to make the proper usage of the cash.
The cash flow statement helps the management of the organisation by allowing them to take corrective actions in cases when there is a misappropriation of the cash by the management.
It helps organisations to establish the need for cash for a specific period to ascertain the smooth functioning of the business.
It is useful in tracking the inflow and the outflow of the cash in the business for a particular accounting period.
It allows the management of the organisation to determine the decisions about the short-term financial requirements of the management.

Question 5: State the meaning of the terms:

(i) Cash Equivalents

(ii) Cash flows.

Answer:

(i) The short-term liquid investments that are made by any business which are not subjected to any change in their values are referred to as cash equivalents. The cash equivalents are held by the business to meet their short-term needs and commitments for investment purposes.

(ii) Cash flows are referred to as the movement of the cash inside and outside the business from the non-cash items. Thus when the cash is generated from the transaction of any non-cash item, then it is referred to as the cash inflow; on the other hand when the cash goes out of the business to meet the requirements for the transactions of any non-cash item, then it is referred to as the cash outflows.

Question 6: Prepare a format of cash flow from operating activities.

Answer: The following is the format of the cash flows from operating activities.

Net profit before tax

(add) deductions made in P&L made for non-cash items like depreciation, goodwill to be written off

(add) deductions made in P&L made for non-operating items like interest

(less) additions made in P&L for non-operating items like dividends received and profit on sale of fixed assets

Operating profit before changes in working capital

(add) increase in current liabilities

(add) decrease in current assets

(less) increase in current assets

(less) decrease in current liabilities

Cash flows from operating activities before tax and

extraordinary items

(less) income tax

(add/less) effects of extraordinary items

Net cash from operating activities

Question 7: State clearly what would constitute the operating activities for each of the following in the following enterprises:

(i) Hotel

(ii) Film production house

(iii) Financial enterprise

(iv) Media enterprise

(v) Steel manufacturing unit

(vi) Software development business unit.

Answer: The following are the operating activities of the following enterprises:

(i) Hotel – The receipt that comes from the sales made to the customers will be the cash inflows and the expenses such as salaries, rent, groceries, etc. will be regarded as the cash outflows.

(ii) Film production house – The sale of the film rights to the distributors will be regarded as the inflows, while the salaries paid to the actors, rent paid for the location, etc. will be regarded as the outflows.

(iii) Financial enterprise – The receipts that are received on the repayments of the loan and the interest on the loans will be the inflows and on the other hand, the outflows will be the salaries, loan recovery expenses, etc.

(iv) Media enterprise – Receipts which are generated from the advertisements will be regarded as the inflows and expenses which are made in the form of the payment of the salaries will be regarded as the outflows.

(v) Steel manufacturing unit – The sale of steel sheets, steel rods, etc. will be regarded as the inflows while the outflows that occur due to the purchase of the raw materials, wages, etc. will be the outflows.

(vi) Software business unit – The receipt is generated from the sale of software and the renewal of licences will be regarded as the inflows and the payment of salaries etc. will be regarded as the outflows.

Question 8: “The nature/type of enterprise can change altogether the category into which a particular activity may be classified.” Do you agree? Illustrate your answer.

Answer: The nature and the type of the business can rightly change the category into which the particular activity may be classified. For instance, a firm that is engaged in the purchase of the land and the buildings will have its operating activities which are in the form of sale and the purchase of the land. On the other hand, the sale and purchase of the land will be not regarded as operational activity in cases

of the other businesses.

Question 9: Describe the procedure to prepare a Cash Flow Statement. Answer:

Answer: The procedure to make the cash flow is as follows:
Firstly, determine the flows of the cash from the operating activities of the business.
Next, the business shall determine the flows of the cash from its investing activities.
Then it must determine the flows of the cash from its financing activities.
The next step involves the total of the sum of all the three activities.
The final step involved the deduction of the opening balance of the cash and the cash equivalents from the resulting sum of all three activities which will result in the figure which is the closing balance of the cash and the equivalents of the cash.

Question 10: Describe the "Indirect" method of ascertaining Cash Flow from Operating Activities.

Answer: The indirect method of ascertaining the cash flow from the operating activities involves all the non-operating and the non-cash items. Under this method, cash flow is ascertained from the flow of the cash of the operating activities beginning with the net profit or the net loss. The income statement in this method is on the accrual basis which hence includes both non-operating items such as interest paid, loss, or the profit made on the sale of any fixed assets; and the non-cash items such as write-off of the goodwill, and depreciation. Following is the sample of the net cash flows from the operating activities:

Net profit before tax

(add) deductions made in P&L made for non-cash items like depreciation, goodwill to be written off

(add) deductions made in P&L made for non-operating items like interest

(less) additions made in P&L for non-operating items like dividends received and profit on sale of fixed assets

Operating profit before changes in working capital

(add) increase in current liabilities

(add) decrease in current assets

(less) increase in current assets

(less) decrease in current liabilities

Cash flows from operating activities before tax and extraordinary items

(less) income tax

(add/less) effects of extraordinary items

Net cash from operating activities

Question 11: Explain the major Cash Inflow and outflows from investing activities.

The example of the cash flow from the investing activities is as follows:

Sale of machinery – Cash inflows

Purchase of machinery – Cash outflows

Question 12: Explain the major Cash flows and outflows from financing activities.

Answer: Cash flows are referred to as the movement of the non-cash items of the business in and outside the business. Thus the cash inflow is referred to as the situation in which the cash comes from a non-cash item and on the other hand when the cash is used by the business to get the noncash item it is referred to as cash outflow. For instance, the sale of the computer of the business generates cash for the business and hence is cash inflow and on the other hand the cash spent on the purchase of the new computer is the cash outflow. The financing activity refers to all those transactions that are related to the acquiring of long-term capital or funds for the business. Thus, the cash flow from the financing activities can be in the following forms:

Proceed from long-term borrowings – Cash inflows

Repayment of long-term borrowings – Cash outflows

Question 13: Anand Ltd. arrived at a net income of Rs 5,00,000 for the year ended March 31, 2017. Depreciation for the year was Rs 2,00,000. There was a gain of Rs 50,000 on assets sold which was credited to the profit and loss account. Bills Receivables increased during the year by Rs 40,000 and Bills Payables also increased by Rs 60,000. Compute the cash flow operating activities by the indirect approach.

Answer:

Cash Flow from Operating Activities as of March 31, 2017
Particulars	Amount	Amount
Particulars	Rs	Rs
Net Profit during the year		500000
Items to be adjusted:
Add: Depreciation	200000
Less: Gain on sale of assets	-50000	150000
Operating Profit before Working Capital changes		650000
Add: Increase in Bills Payable	60000
Less: Increase in Bills Receivables	-40000	20000
Net Cash from Operations		670000

Question 14: From the information given below you are required to prepare the cash paid for the inventory:

	Rs
Inventory in the beginning	40,000
Purchases	1,60,000
Inventory in the end	38,000
Trade payables in the beginning	14,000
Trade payables in the end	14,500

Answer:

Trade Payable A/c
Date	Particular	Amount	Date	Particular	Amount
	Cash (B.F.)	159500		Balance b/d	14000
	Balance c/d	14500		Purchases	160000
		174000			174000

Cash paid for Inventory amounts to Rs.159500.

Question 15: For each of the following transactions, calculate the resulting cash flow and state the nature of cash for low vis., operating, investing, and f, financing.

(a) Acquired machinery for Rs 2,50,000 paying 20% drawn and executing a bond for the balance payable.

(b) Paid Rs 2,50,000 to acquire shares in Informa Tech. and received a dividend of Rs 50,000 after the acquisition.

Answer: (a) Amount paid for Machinery = 250000 x 20/100 = 50000

Part-payment Rs. 500 of 00 for acquiring machinery Rs.250000 is related to Voting Activities.

(b) Amount paid for acquiring shares (250000)

Dividend received 50000

Net Cash used in Investing Activities (200000)

AmountThe amount to acquire assets and divided dividends is a part of Investing Activities.

Question 16: The following is the Profit and Loss Account of Yamuna Limited:

Statement of Profit and Loss of Yamuna Ltd. for the Year ended March 31, 2017

Particulars		Note No.	Amount (Rs)
i)	Revenue from Operations		10,00,000
ii)	Expenses
	Cost of Material Consumed	1	50,000
	Purchase of Stock-in-trade		5,00,000
	Other Expenses	2	3,00,000
	Total Expenses		8,50,000
iii)	Profit before Tax (I – ii)		1,50,000

Additional information:

(i) Trade receivables decreased by 30,000 during the year.

(ii) Prepaid expenses increase by Rs 5,000 during the year.

(iii) Trade creditors decreased by Rs 15,000 during the year.

(iv) Outstanding expenses payable increased by Rs 3,000 during the year.

(v) Operating expenses included depreciation of Rs 25,000.

Compute net cash provided by operations for the year ended March 31, 2017, by the indirect method.

Answer:

Cash Flow from Operating Activities as of March 31, 2017
Particulars	Amount	Amount
Particulars	Rs	Rs
Net Profit earned during the year		150000
Items to be added:
Depreciation	25000	25000
Operating Profit before Working Capital changes		175000
Add: Increase in Current Liabilities
O/s Expenses	3000
Add: Decrease in Current Assets
Stock	50000	83000
Less: Decrease in Current Liabilities
Trade Creditors	-15000
Less: Increase in Current Assets
Prepaid Expenses	-5000	-20000
Net Cash from Operations		238000

Question 17: Compute cash from operations from the following figures:

(i) Profit for the year 2016-17 is a sum of Rs. 10,000 after providing for depreciation of Rs. 2,000.

(ii) The current assets of the business for the year ended March 31, 2016 and 2017 are as follows:

Particulars	March 31, 2016 (Rs.)	March 31, 2017 (Rs.)
Trade Receivables	14,000	15,000
Provision for Doubtful Debts	1,000	1,200
Trade Payables	13,000	15,000
Inventories	5,000	8,000
Short-term Investments	10,000	12,000
Expenses payable	1,000	1,500
Prepaid Expenses	2,000	1,000
Accrued Income	3,000	4,000
Income received in advance	2,000	1,000

Answer:

Cash Flow Statement for the year ending March 31, 2017
Particulars	Amount	Amount
Particulars	Rs	Rs
Cash Flow from Operating Activities
Net Profit		10000
Items to be added:
Depreciation	2000	2000
Operating Profit before Working Capital changes		12000
Less: Increase in Current Assets
Trade Receivables	-1000
Accrued Income	-1000
Other Current Assets	-2000
Inventories	-3000
Add: Increase in Current Liabilities
Provision for Doubtful Debts	200
Trade Payables	2000
Expense Payable	500
Add: Decrease in Current Assets
Prepaid Expenses	-1000
Less: Decrease in Current Liabilities
Income received in advance	1000	-4300
Net Cash from Operating Activities		7700

Question 18: From the following particulars of Bharat Gas Limited, calculate Cash Flows from Investing Activities. Also, show the workings of preparing the ledger accounts:

Balance Sheet of Bharat Gas Ltd. as on 31 Mar. 2016 and 31 Mar. 2017

Particulars	Note No.	Figures as of the end of 2017 (Rs)	Figures as on and off reporting 2016 (Rs)
II) Assets
1. Non-current Assets
a) Fixed assets
i) Tangible assets	1	12,40,000	10,20,000
ii) Intangible assets	2	4,60,000	3,80,000
b) Non-current investments	3	3,60,000	2,60,000

Notes:	1	Tangible assets = Machinery
	2	Intangible assets = Patents

Notes

	Figures of current year	Figures of previous year
1. Tangible Assets Machinery
	12,40,000	10,20,000

2. Intangible Assets Goodwill Patents	3,00,000	1,00,000
	1,60,000	2,80,000
	4,60,000	3,80,000

3. Non-current Investments
10% long term investments	1,60,000	60,000
Investment in land	1,00,000	1,00,000
Shares of Amartex Ltd.	1,00,000	1,00,000
	3,60,000	2,60,000

Additional Information:

(a) Patents were written off to the extent of Rs. 40,000 and some Patents were sold at a profit of Rs. 20,000.

(b) A Machine costing Rs. 1,40,000 (Depreciation provided thereon Rs. 60,000) was sold for Rs. 50,000. Depreciation charged during the year was Rs. 1,40,000.

(c) On March 31, 2016, 10% of ments were purchased for Rs. 1,80,000, and some Investments were sold at a profit of Rs. 20,000. Interest on Investment was received on March 31, 2017.

(d) Amartex Ltd. paid dividends on its shares.

(e) A plot of Land had been purchased for investment purposes and let out for commercial use and rent received Rs. 30,000.

Answer:

Cash Flow from Investing Activities
Particulars	Amount	Amount
Particulars	Rs	Rs
Cash Inflow
Proceeds from the Sale of other f Patents	100000
Proceeds from the Sale of other Machinery	50000
Proceeds from Sale of 10% Long-term Investment	100000
Interest received on 10% Long-term Investment	6000
Dividend received from Amartex Ltd.	10000
Rent received	30000	296000
Cash Outflow
Purchase of Goodwill	-200000
Purchase of Machinery	-440000
Purchase of 10% Long-term Investment	-180000	-820000
Net Cash Used in Investing Activities		-524000

Patents A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	280000		P/L (written off)	40000
	P/L (Profit on Sale)	20000		Bank (Sale) (B.F.)	100000
				Balance c/d	160000
		300000			300000
Machinery A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	1020000		Depreciation	140000
Patents A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	280000		P/L (written off)	40000
	P/L (Profit on Sale)	20000		Bank (Sale) (B.F.)	100000
				Balance c/d	160000
		300000			300000

Machinery A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	1020000		Depreciation	140000

Patents A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	280000		P/L (written off)	40000
	P/L (Profit on Sale)	20000		Bank (Sale) (B.F.)	100000
				Balance c/d	160000
		300000			300000
Machinery A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	1020000		Depreciation	140000

Question 19: From the following Balance Sheet of Mohan Ltd. Prepare the cash flow Statement:

Balance Sheet of Mohan Ltd.

as at 31 Mar. 2016 and 31 Mar. 2017

Particulars	Note No.	March 31, 2017 (Rs)	March 31, 2016 (Rs)
I) Equity and Liabilities	1
1. Shareholders’ Funds
a) Equity share capital		3,00,000	2,00,000
b) Reserves and surplus		2,70,000	2,20,000
2. Non-current liabilities
a) Long-term borrowings		80,000	1,00,000
3. Current liabilities
Trade payables		1,20,000	1,40,000
Short-term provisions	2
Total		7,70,000	6,60,000
II) Assets
1. Non-current assets
a) Fixed assets	3	5,00,000	3,20,000
2. Current assets
a) Inventories		1,50,000	1,30,000
b) Trade receivables	3	90,000	1,20,000
c) Cash and cash equivalents	4	30,000	90,000
Total		7,70,000	6,60,000

Notes to account

	2017	2016
1. Long-term borrowings
Bank Loan	80,000	1,00,000
2. Fixed assets	6,00,000	4,00,000
Less: Accumulated Depreciation	1,00,000	80,000
(Net) Fixed Assets	5,00,000	3,20,000
3. Trade receivables
Debtors	60,000	1,00,000
Bills receivables	30,000	20,000
	90,000	1,20,000
4. Cash and cash equivalents
Bank	30,000	90,000

Additional Information:

Machine Costing Rs. 80,000 on which accumulated depreciation was Rs. 50,000 was sold for Rs. 20,000.

Answer:

Cash Flow Statement of Mohan Ltd.
Particulars	Amount	Amount
Particulars	Rs	Rs
A. Cash flow from Operating Activities
Profit as per the Balance Sheet	40000
Proposed Dividend	70000
Net Profit before Extraordinary Items		110000
Adjustments:
Depreciation	70000
Loss on Sale of Machine	10000	80000
Operating Profit before Working Capital changes		190000
Less: Increase in Current Assets
Inventories	-20000
Bill Receivables	-10000
Add: Decrease in Current Assets
Debtors	40000
Less: Decrease in Current Liabilities
Trade Payable	-20000	-10000
Net Cash from Operations		180000
B. Cash Flow from Investing Activities
Proceeds from Sale of Fixed Assets	20000
Purchase of Fixed Assets	-280000
Net Cash Outflow from Investing Activity		-260000
C. Cash Flow from Financing Activities
Issue of Shares	100000
Bank Loan paid	-20000
Dividend paid	-60000
Net Cash from Financing Activities		20000
D. Net Decrease in Cash and Cash Equivalents (A+B+C)		-60000
Add: Cash and Cash Equivalents in the beginning		90000
E. Cash and Cash Equivalents at the end		30000

Fixed Assets A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	400000		Bank	20000
	Bank (Purchase) (B.F.)	280000		P/L	10000
				Accumulated Dep.	50000
				Balance c/d	600000
		680000			680000

Accumulated Depreciation A/c
Date	Particular	Amount	Date	Particular	Amount
	Fixed Assets	50000		Balance b/d	80000
	Balance c/d	100000		P/L (B.F.)	70000
		150000			150000

Question 20: From the following Balance Sheets of Tiger Super Steel Ltd., prepare Cash Flow Statement:

Balance Sheet of Tiger Super Steel Ltd. as on 31 Mar. 2016 and 31 Mar. 2017

Particulars	Note No.	March 31, 2017 (Rs)	March 31, 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	1,40,000	2,00,000
b) Reserves and surplus	2	38,400	26,400
2. Current Liabilities
a) Trade payables	3	21,200	14,000
b) Other current liabilities	4	2,400	3,200
c) Short-term provisions	5	12,800	11,200
Total		2,14,800	1,74,800
II) Assets
1. Non-Current Assets
a) Fixed assets
i) Tangible assets	6	96,400	76,000
ii) Intangible assets		18,800	24,000
b) Non-current investments		14,000	4,000
2. Current assets
a) Inventories		31,200	34,000
b) Trade receivables		43,200	30,000
c) Cash and cash equivalents		11,200	6,800
Total		2,14,800	1,74,800

Notes to accounts:

	2017	2016
1. Share Capital
Equity share capital	1,20,000	80,000
10% Preference share capital	20,000	40,000
	1,40,000	1,20,000
2. Reserves and surplus
General reserve	12,000	8,000
Balance in statement of profit and loss	26,400	18,400
	38,400	26,400
3. Trade payables
Bills payable	21,200	14,000
4. Other current liabilities Outstanding expenses
	2,400	3,200
5. Short-term provisions	12800	11200
Provision for taxation
Proposed dividend
6. Tangible assets
Land and building	20,000	40,000
Plant	76,400	36,000
	96,400	76,000

Answer:

Cash Flow Statement of Tiger Super Steels Ltd.
Particulars	Amount	Amount
Particulars	Rs	Rs
A. Cash flow from Operating Activities
Profit as per the Balance Sheet	3600
General Reserve	4000
Proposed Dividend	15600
Provision for Taxation	12800
Net Profit before Taxation and Extraordinary		36000
Items to be added:
Depreciation on Land and Building	20000
Depreciation on Plant	10000
Goodwill written off	5200	35200
Operating Profit before Working Capital changes		71200
Less: Increase in Current Assets
Trade Receivables	-13200
Less: Decrease in Current Liabilities
O/s Expenses	-800
Add: Decrease in Current Assets
Inventories	2800
Add: Increase in Current Liabilities
Bills Payables	7200	-4000
Cash generated from Operating Activities		67200
Less: Income Tax paid		-11200
Net Cash from Operating Activities		56000
B. Cash Flow from Investing Activities
Purchase of Plant		-40400
Purchase of Investment		-20000
Net Cash Used in Investing Activities		-60400
C. Cash Flow from Financing Activities
Issue of Equity Shares		40000
Dividend paid		-11200
Redemption of 10% Preference Shares		-20000
Net Cash from Financing Activities		8800
D. Net Increase in Cash and Cash Equivalents (A+B+C)		4400
Add: Cash and Cash Equivalents at the beginning		6800
E. Cash and Cash Equivalents at the end		11200

Working Note: 1.

Plant A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	36000		Depreciation	10000
	Bank (Purchase) (B.F.)	50400		Balance c/d	76400
		86400			86400

Net Profit Before Tax	3600
Profit and Loss Account	12800
Provision for Tax	16400

Question 21: From the following information, prepare cash flow statement:

Particulars	Note No.	31st March 2015 (Rs)	31st March 2014 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital		7,00,000	5,00,000
b) Reserves and surplus		4,70,000	2,50,000
2. Non-current Liabilities
(8% Debentures)		4,00,000	6,00,000
3. Current Liabilities
a) Trade payables		9,00,000	6,00,000
Total		24,70,000	19,50,000
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible		7,00,000	5,00,000
ii) Intangible-Goodwill		1,70,000	2,50,000
2. Current assets
a) Inventories		6,00,000	5,00,000
b) Trade Receivables		6,00,000	4,00,000
c) Cash and cash equivalents		4,00,000	3,00,000
Total		24,70,000	19,50,000

Additional Information:

Depreciation Charge on Plant amounts to Rs. 80,000.

Answer:

Cash Flow Statement for the year ending March 31, 2015
Particulars	Amount	Amount
Particulars	Rs	Rs
A. Cash flow from Operating Activities
Net Profit		220000
Items to be added:
Interest on Debentures	48000
Depreciation on Fixed Assets	80000
Goodwill written off	80000	208000
Operating Profit before Working Capital changes		428000
Add: Increase in Current Liabilities
Creditors	300000
Less: Increase in Current Assets
Inventories	-100000
Trade Receivables	-200000	-
Cash generated from Operating Activities		428000
Less: Income Tax paid		-
Net Cash from Operating Activities		428000
B. Cash Flow from Investing Activities
Purchase of Fixed Assets	-280000
Net Cash Used in Investing Activities		-280000
C. Cash Flow from Financing Activities
Issue of Share Capital	200000
Redemption of Debentures	-200000
Interest paid on Debentures	-48000
Net Cash from Financing Activities		-48000
D. Net Increase in Cash and Cash Equivalents (A+B+C)		100000
Add: Cash and Cash Equivalents in the beginning		300000
E. Cash and Cash Equivalents at the end		400000

Working Note:

Fixed Assets A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	500000		Depreciation	80000
	Purchase (b/f)	280000		Balance c/d	700000
		780000			780000

Question 22: From the following Balance Sheet of Yogeta Ltd., prepare cash flow statement:

Particulars	Note No.	31st March 2017 (Rs)	31st March 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	4,00,000	2,00,000
b) Reserves and surplus- Surplus		2,00,000	1,00,000
2. Non-current Liabilities
a) Long-term borrowings	2	1,50,000	2,20,000
3. Current Liabilities
a) Short-term borrowings		1,00,000	-
(Bank overdraft)
b) Trade payables		70,000	50,000
c) Short-term provision		50,000	30,000
(Provision for taxation)
Total		9,70,000	6,00,000
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible		7,00,000	4,00,000
2. Current assets
a) Inventories		1,70,000	1,00,000
b) Trade Receivables		1,00,000	50,000
c) Cash and cash equivalents		-	50,000
Total		9,70,000	6,00,000
Total

Notes to Accounts

Particulars	31st March 2017 (Rs)	31st March 2016 (Rs)
1. Share capital
a) Equity share capital	3,00,000	2,00,000
b) Preference share capital	1,00,000	-
	4,00,000	2,00,000
2. Long term borrowings
Long-term loan	-	2,00,000
Long-term Rahul	1,50,000	20,000
	1,50,000	2,20,000

Additional Information: Net Profit for the year after charging Rs. 50,000 as Depreciation was Rs. 1,50,000. Dividend paid on Share was Rs. 50,000, Tax Provision created during the year amounted to Rs. 60,000.

Answer:

Cash Flow Statement of Yogeta Ltd.
Particulars	Amount	Amount
Particulars	Rs	Rs
A. Cash flow from Operating Activities
Profit as per the Balance Sheet	100000
Proposed Dividend	50000
Provision for Taxation	60000
Net Profit before Taxation and Extraordinary		210000
Items to be added:
Depreciation	50000	50000
Operating Profit before Working Capital changes		260000
Add: Increase in Current Liabilities
Trade Payable	20000
Less: Increase in Current Assets
Inventories	-70000
Trade Receivables	-50000	-100000
Cash generated from Operating Activities		160000
Less: Income Tax paid		-40000
Net Cash from Operating Activities		120000
B. Cash Flow from Investing Activities
Purchase of Fixed Assets	-350000
Net Cash used in Investing Activities		-350000
C. Cash Flow from Financing Activities
Issue of Equity Shares	100000
Issue of Preference Shares	100000
Loan from Rahul	130000
Less: Repayment of Loan	-200000
Dividend paid	-50000
Net Cash from Financing Activities		80000
D. Net Decrease in Cash and Cash Equivalents (A+B+C)		-150000
Add: Cash and Cash Equivalents in the beginning		50000
E. Cash and Cash Equivalents at the end		-100000

Working Note: 1

Provision for Taxation A/c
Date	Particular	Amount	Date	Particular	Amount
	Bank (B.F.)	40000		Balance b/d	30000
	Balance c/d	50000		P/L	60000
		90000			90000

Fixed Assets A/c
Date	Particular	Amount	Date	Particular	Amount
	Balance b/d	400000		Depreciation	50000
	Bank	350000		Balance c/d	700000
		750000			750000

Question 23: Following is the Financial Statement of Garima Ltd., prepare cash flow statement.

Particulars	Note No.	31st March 2017 (Rs)	31st March 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	4,40,000	2,80,000
b) Reserve and surplus- Surplus	2	40,000	28,000
2. Current Liabilities
a) Trade payables		1,56,000	56,000
c) Short-term provisions		12,000	4,000
(Provision for taxation)
Total		6,48,000	3,68,000
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible		3,64,000	2,00,000
2. Current assets
a) Inventories		1,60,000	60,000
b) Trade receivables		80,000	20,000
c) Cash and cash equivalents		28,000	80,000
d) Other current assets		16,000	8,000
Total		6,48,000	3,68,000

Notes to Accounts

Particulars	31st March 2017 (Rs)	31st March 2016 (Rs)
1. Share capital
a) Equity share capital	3,00,000	2,00,000
b) Preference share capital	1,40,000	80,000
	4,40,000	2,80,000
2. Reserve and surplus
Surplus in statement of profit and loss at the beginning of the year	28,000
Add: Profit of the year	16,000
Less: Dividend	4,000
Profit at the end of the year	40,000

Additional Information:

1. Interest paid on Debenture Rs 600

2. Dividend paid during the year Rs 4,000

3. Depreciation charged during the year Rs 32,000

Answer:

Cash Flow Statement (Indirect Method)
Particulars	Amount	Amount
Particulars	Rs	Rs
A. Cash flow from Operating Activities
Profit as per the Balance Sheet	12000
Proposed Dividend	4000
Provision for Taxation	12000
Net Profit before Taxation and Extraordinary		28000
Items to be added:
Interest paid on Debentures	600
Depreciation	32000	32600
Operating Profit before Working Capital changes		60600
Add: Increase in Current Liabilities
Trade Payables	100000
Less: Increase in Current Assets
Other Current Assets	-8000
Inventories	-100000
Trade Receivables	-60000	-68000
Cash generated from Operating Activities		-7400
Less: Income Tax paid		-4000
Net Cash from Operating Activities		-11400
B. Cash Flow from Investing Activities

Notes to Accounts

	Particulars	31st March 2017 (Rs)	31st March 2016 (Rs)
1.	Reserve and surplus
	(i) Balance in the statement of profit and loss	7000	6,000
	(ii) General reserve	2,500	2,000
		9,500	8,000
2.	Short-term borrowings
	Bank Overdraft	6,800	12,500
3.	Short-term provisions
	(i) Provision for taxation	4,200	3,000
	(ii) Proposed dividend
4.	Fixed Assets:
	Fixed Assets	42,000	41,000
	Less: Accumulated Depreciation	(15,000)	(11,000)
		25,000	30,000

Additional Information:

Interest paid on Debenture Rs. 600

Answer:

Cash Flow Statement of Computer India Ltd.
Particulars	Amount	Amount
Particulars	Rs	Rs
A. Cash flow from Operating Activities
Profit as per the Balance Sheet	200
Proposed Dividend	5800
General Reserve	500
Provision for Taxation	4200
Net Profit before Taxation and Extraordinary		10700
Items to be added:
Provision for Depreciation	4000
Interest paid on Debentures	600	4600
Operating Profit before Working Capital changes		15300
Less: Increase in Current Assets
Trade Receivables	-4000
Inventories	-5000
Prepaid Expenses	-200
Less: Decrease in Current Liabilities
Trade Creditors	-1000	-10200
Cash generated from Operating Activities		5100
Less: Income Tax paid		-3000
Net Cash from Operating Activities		2100
B. Cash Flow from Investing Activities
Sale of Fixed Assets	1000
Net Cash Used in Investing Activities		1000
C. Cash Flow from Financing Activities
Issue of Equity Shares	10000
Issue of 10% Debentures	500
Less: Dividend paid	-5000
Less: Interest paid	-600
Net Cash from Financing Activities		4900
D. Net Increase in Cash and Cash Equivalents (A+B+C)
Add: Cash and Cash Equivalents at the beginning
Cash
Bank Overdraft
E. Cash and Cash Equivalents at the end
Cash
Bank Overdraft

Topics Covered in Chapter 6 Accountancy Class 12 - Cash Flow Statement

Accountancy Class 12 Chapter 6 Topics

Objectives and Benefits of Cash Flow Statement

Cash and Cash Equivalents

Classification of Activities for the Preparation of Cash Flow Statement

Cash from Operating Activities

Cash from Investing Activities

Cash from Financing Activities

Treatment of Some Peculiar Items

Ascertaining Cash Flow from Operating Activities

Preparation of Cash Flow Statement

Benefits of NCERT Solutions for Class 12 Accountancy Chapter 6 – Cash Flow Statement

The chapter enhances students' analytical skills, enabling them to interpret cash flow statements and assess a company's financial position accurately.
Step-by-step solutions ensure that students can easily follow the format and structure of cash flow statements, including operating, investing, and financing activities.
Each exercise question is addressed with clear, detailed answers, ensuring that students can follow along and understand the logic behind each step
By providing thorough answers and explanations, these solutions help students prepare effectively for their exams, boosting their confidence and performance
Real-life examples included in the solutions help students understand the practical application of cash flow statements, making the concepts more relatable and easier to understand.

Conclusion

NCERT Solutions for Class 12 Accountancy Chapter 6 – Cash Flow Statement provides students with a clear understanding of how to prepare and interpret cash flow statements. These solutions help students learn concepts easily and prepare effectively for exams. By explaining each step clearly and using practical examples, they learn about financial statements. Aligned with the latest CBSE syllabus, these solutions ensure that students are well-prepared for their exams and gain confidence in their ability to analyse financial data. Overall, they are a valuable resource for students to build a strong foundation in accounting and financial management.

NCERT Solutions for Class 12 Accountancy- Other Chapter-wise Links for FREE PDF

NCERT Solutions Class 12 Accountancy Chapter-wise List (Part 2)

Chapter 1 - Accounting for Share Capital

Chapter 2 - Issue and Redemption of Debentures

Chapter 3 - Financial Statements of a Company

Chapter 4 - Analysis of Financial Statements

Chapter 5 - Accounting Ratios

FAQs on NCERT Solutions for Class 12 Accountancy Chapter 6 Cash Flow Statement

1. What are the three important activities of Cash Flow Statement format Class 12?

The three important activities of Cash Flow Statement Class 12 Solutions are:

Operating Activities
Investing Activities
Financing Activities.

2. What is the most important section on the statement of cash flows?

The Operating Activities section is often considered the most important as it reflects the cash flows generated from core business operations.

3. What are the three heads of the cash flow statement?

Three heads include: Financing, operating, and investing activities.

4. What are Cash Flow Statement Questions with Solutions about?

The statement of cash flows answers questions such as where did the cash come from (sources), where did the cash go (uses), and what was the change in cash balance during the period.

5. How to analyse cash flow?

Cash flow analysis involves examining the net cash provided by operating activities to assess the company's ability to generate cash internally, evaluating cash flows from investing activities to understand capital expenditures and asset acquisitions, and reviewing financing activities to gauge how the company raises and repays capital.

6. What is the formula for cash flow?

The formula for cash flow is: Cash Flow = Cash from Operating Activities + Cash from Investing Activities + Cash from Financing Activities

7. What is the direct method of cash flow?

The direct method of cash flow involves reporting actual cash receipts and payments from operating activities, such as cash received from customers and cash paid to suppliers.

8. What are the classifications of cash flow statements?

Cash flow statements are classified into three sections: Operating Activities, Investing Activities, and Financing Activities.

9. What are the advantages of Cash Flow Statement Questions With Solutions Class 12?

The advantages of Cash Flow Statement Questions With Solutions Class 12 include providing insights into a company's liquidity, aiding in financial decision-making, helping assess the ability to pay dividends and debt, and serving as a tool for monitoring cash management.

10. What are the limitations of Cash Flow Statement Class 12 Solutions?

Limitations include not providing information about non-cash transactions, potential manipulation through timing differences, and not considering changes in working capital adequately.

S. No	Important Links for Class 12 Accountancy
1.	CBSE Class 12 Accountancy NCERT Books
2.	CBSE Class 12 Accountancy Sample Papers