Question

Calculate ‘cash from operating activities’ from the following:

1. Profit for the year amounted to ₹ 50,000 after providing for depreciation of ₹ 20,000.
2. Following is the position of current assets and current liabilities:

	31.3.2022 (₹)	31.3.2023 (₹)
Cash in Hand	15,000	28,000
Trade Receivables	1,00,000	70,000
Provision for Doubtful Debts	5,000	6,000
Trade Payables	80,000	75,000
Inventories	1,20,000	1,60,000
Outstanding Expenses	-	10,000
Prepaid Expenses	8,000	2,000
Accrued Income	10,000	15,000
Income Received in Advance	6,000	3,000
Bank Overdraft	75,000	60,000

Hint: Decrease in Bank Overdraft will be recorded under ‘Financing Activities’.

Answer 1

Cash Flow from Operating Activities for the year ending 31st March, 2023
Particulars		Amount (₹)
Net Profit for the Year		50,000
Adjustments for non-cash and non-operating items:
Add: Depreciation		20,000
Operating Profit before Working Capital Changes		70,000
Add:
Trade Receivables (1,00,000 – 70,000)	30,000
Provision for Doubtful Debts (6,000 – 5,000)	1,000
Outstanding Expenses (10,000 – 8,000)	2,000
Prepaid Expenses (8,000 – 2,000)	6,000	39,000
Less:
Trade Payables (80,000 – 75,000)	(5,000)
Inventories (1,60,000 – 1,20,000)	(40,000)
Accrued Income (15,000 – 10,000)	(5,000)
Income Received in Advance (6,000 – 3,000)	(3,000)	(53,000)
Net Cash from Operating Activities		64,000

Note: Bank overdraft decrease is a financing activity, not included in operating cash calculation.