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Solution - Concept of Cash Flow Statement

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Give the meaning of ‘Cash Equivalents’ for the purpose of preparing Cash Flow Statement.

What is meant by ‘Cash Equivalent’ while preparing Cash Flow Statement?

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Following was the Balance Sheet of M.M Ltd at on 31.3.2015.

                                                        M.M. Ltd Balance Sheet as at 31-3-2015

ParticularsNote No.31-3-2015 (Rs.)31-3-2014 (Rs.)

I. Equity and Liabilities

        1. Shareholder’s Funds

              a. Share Capital

              b. Reserve and Surplus

         2. Non - Current Liabilities

              a) Long – term borrowings

         3. Current Liabilities

              a) Short – term borrowings

              b) Short – term provisions

 

 

 

1

 

2

 

3

4

 

 

5,00,000

2,00,000

 

4,50,000

 

1,50,000

70,000

 

 

4,00,000

(50,000)

 

5,00,000

 

50,000

90,000

Total 13,70,0009,90,000

II. Assets

     1. Non – Current Assets

               a) Fixed Assets

                     Tangible assets

                     Intangible assets

               b) Non – Current Investments

      2. Current Assets

                a) Current Investments

                b) Inventories

                c) Cash and Cash Equivalents

 

 

 

5

6

 

 

 

7

 

 

 

 

10,03,000

20,000

1,00,000

 

50,000

1,07,000

90,000

 

 

 

7,20,000

30,000

75,000

 

60,000

45,000

60,000

Total 13,70,0009,90,000

 

Note NoParticulars31-3-2015(Rs.)31-3-2014(Rs.)

1.

 

Reserve and Surplus

(Surplus i.e. Balance in Statement of Profit and Loss)

 

2,00,000

 

(50,000)

  2,00,000(50,000)

2.

 

Long term borrowings :

12 % Debentures

 

4,50,000

 

5,00,000

  4,50,0005,00,000

3.

 

Short – term borrowings :

Bank Overdraft

 

1,50,000

 

50,000

  1,50,00050,000

4.

 

Short – term provisions

Provisions for tax

 

70,000

 

90,000

  70,00090,000

5.

 

 

Tangible Assets

Machinery

Accumulated Depreciation

 

12,03,000

(2,00,000)

 

8,21,000

(1,01,000)

  10,03,0007,20,000

6.

 

Intangible Assets

Goodwill

 

20,000

 

30,000

  20,00030,000

7.

 

Inventories

Stock in trade

 

1,07,000

 

45,000

  1,07,00045,000

Additional Information

(i) 12% Debentures were redeemed on 31-3-2015

(ii) Tax Rs. 70,000 was paid during the year

Prepare Cash flow Statement.

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L Ltd. had purchased machinery on deferred payment basis. During the year ended 31-3-2015 the company paid an installment of Rs.4,00,000 which included interest of Rs.4,000. Under which activity or activities payment of installment will be classified while preparing Cash flow Statement.

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Solution for concept: Concept of Cash Flow Statement. For the courses 12th CBSE (Arts), 12th CBSE (Commerce), 12th CBSE (Science)
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