Question

Narula Ltd. earned a profit of ₹ 2,00,000 after charging or crediting the following items:

	₹
(i) Depreciation on Plant & Machinery	25,000
(ii) Loss on Sale of Furniture	3,000
(iii) Amortization of Development Cost	8,000
(iv) Provision for Doubtful Debts	2,400
(v) Provision for Taxation	40,000
(vi) Transfer to General Reserve	20,000
(vii) Gain on Sale of Machinery	9,000

The following additional information is given to you:

	31st March, 2024 (₹)	31st March, 2023 (₹)
Trade Receivables	1,00,000	90,000
Trade Payables	60,000	41,000
Outstanding Expenses	1,000	5,000
Prepaid Expenses	2,000	-

You are required to determine the Cash from operating activities.

Answer 1

Cash flow from operating activities for the year ending 31st March, 2024.
Particulars	Amount (₹)	Amount (₹)
Net Profit for the year		2,00,000
Adjustments for non-cash and non-operating items:
Add:
Depreciation on Plant & Machinery	25,000
Loss on Sale of Furniture	3,000
Amortization of Development Cost	8,000
Provision for Doubtful Debts	2,400
Provision for Taxation	40,000
Transfer to General Reserve	20,000	98,400
		2,98,400
Less: Non-Operating Income
Gain on Sale of Machinery		(9,000)
Adjusted Operating Profit		2,89,400
Changes in Working Capital
Less:
Increase in Trade Receivables (1,00,000 − 90,000)	(10,000)
Decrease in Outstanding Expenses (1,000 − 5,000)	(4,000)
Increase in Prepaid Expenses (2,000 − 0)	(2,000)
Add: Increase in Trade Payables (60,000 − 41,000)	19,000
Net Effect of Working Capital Changes		3,000
Net Cash from Operating Activities		2,92,400