Analysis of Financial Statements
Ts
Grewal 2023 for Class 12 Commerce Accountancy
Chapter 5 - Cash Flow Statement
Question 1:
Identify the transactions as belonging to (i) Operating Activities, (ii) Investing Activities, (iii) Financing Activities and (iv) Cash and Cash Equivalents:
(a) Cash Sale of
Goods |
(b) Cash Received
against Revenue from Services rendered |
(c) Cash Purchase
of Goods |
(d) Cash Paid
against Services Taken |
(e) Patents
Purchased |
(f) Marketable
Securities |
(g) Bank Overdraft |
(h) Proceeds from
Issue of Debentures |
(i) Purchase of Shares |
(j) Repayment of
Long-term Loan |
(k) Commission
Received |
(l) Redemption of
Debentures |
(m) Interest on
Debentures |
(n) Interest on
Investments |
(o) Income Tax
Paid |
(p) Income Tax
Paid on Gain of Sale of Asset |
(q) Cash Received
from Debtors |
(r) Cash Paid to
Creditors. |
Answer:
OPERATING ACTIVITY |
INVESTING ACTIVITY |
FINANCING ACTIVITY |
CASH AND CASH EQUIVALENTS |
a. Cash Sale of Goods |
e. Patents Purchased |
g. Bank Overdraft |
f. Marketable Securities |
b. Cash Received against Revenue from Services rendered |
i. Purchase of Shares |
h. Proceeds from Issue of Debentures |
|
c. Cash Purchase of Goods |
n. Interest on Investments |
j. Repayment of Long-term Loan |
|
d. Cash paid against Services Taken |
p. Income Tax paid on Gain on Sale of Asset |
l. Redemption of Debentures |
|
k. Commission Received |
|
m. Interest on Debentures |
|
o. Income Tax paid |
|
|
|
q. Cash Received from Debtors |
|
|
|
r. Cash Paid to Creditors |
|
|
|
Question 2:
Classify the following transactions as Operating Activities for a financial company and a non-financial company:
(a) Purchase of
Shares on a Stock Exchange. |
(b) Dividend
received on Shares. |
(c) Dividend paid
on Shares. |
(d) Loans given. |
(e) Loans taken. |
(f) Interest paid
on borrowings. |
Answer:
OPERATING ACTIVITY |
|
Financial
Company |
Non-Financial
Company |
a. Purchase of
Shares on a Stock Exchange |
|
b. Dividend
received on shares |
|
d. Loans given |
|
e. Loans taken |
|
f. Interest paid
on borrowings |
|
A financial company deals with securities like shares, bonds, debentures, etc on a regular basis. These securities form part of their
stock and hence purchase and sale of these securities will be categorised under Operating Activity. But, Dividend paid by
them will be the part of Financing Activities.
However, for a non-financial company issue of shares, debentures, etc form part of financing activities as such issue will
increase the capital employed in the business.
Question 3:
State which of the following would
result in inflow/outflow or no flow of Cash and Cash Equivalents:
(a) Sale of Fixed Assets, Book Value ` 1,00,000 at a profit
of `10,000.
(b) Sale of goods against cash.
(c) Purchase of machinery for cash.
(d) Purchase of Land and Building for `10,00,000. Consideration paid by issue of debentures.
(e) Issued fully paid Bonus Shares.
(f) Cash withdrawn from bank.
(g) Payment of Interim Dividend.
Answer:
Inflow |
Outflow |
No Flow |
a. Sale of Fixed Assets |
c. Purchase of Machinery for cash |
d. Purchase of Land and Building.
Consideration paid by issue of Debentures. |
b. Sale of goods against cash |
g. Payment of Interim Dividend |
e. Issued fully paid bonus shares |
|
|
f. Cash withdrawn from Bank |
Question 4:
For each of the following
transactions, calculate the resulting Cash Flow and state the nature of Cash
Flow, i.e., whether it is Operating, Investing or Financing:
(a) Acquired machinery for ` 2,50,000 paying 20%
by cheque and executing a bond for the balance payable.
(b) Paid `2,50,000 to
acquire shares in Informa Tech Ltd. and received a
dividend of `50,000 after acquisition.
(c) Sold machinery of original cost of `2,00,000
with an accumulated depreciation of `1,60,000 for `60,000.
Answer:
(a) Investing Activity: 50,000
(b) Investing Activity: 2,00,000
(c) Investing Activity: 60,000
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Ts Grewal Solution 2024-2025
Class 12 / Volume – 3
Chapter 4 – Cash Flow Statements