Question

From the following information, calculate ‘cash inflows from operating activities’:

	₹
Profit & Loss Balance 1-4-2021 (Credit)	5,50,000
Profit & Loss Balance 31 -3-2022 (Credit)	8,00,000
Amount transferred to General Reserve	50,000
Income Tax Provision made	1,50,000
Discount on Issue of Debentures written off	10,000
Prepaid Expenses on 1-4-2021	8,000
Loss on Sale of Furniture	1,000
Income from Investment	4,000

Answer 1

Cash from Operating Activities
Particulars	Amount (₹)
Net Profit for the Year (8,00,000 − 5,50,000)	2,50,000
Adjustments for non-cash and non-operating items:
Add:
Transfer to General Reserve	50,000
Income Tax Provision Made	1,50,000
Discount on Issue of Debentures Written Off	10,000
Prepaid Expenses on 1-4-2021	8,000
Loss on Sale of Furniture	1,000
Operating Profit before Working Capital Changes	4,69,000
Less: Non-Operating Income
Income from Investment	(4,000)
Net Cash from Operating Activities (before tax)	4,65,000