34.

Read the following hypothetical text and answer the given questions on
the basis of the same.
In 2011, two young Indian entrepreneurs, Vaishali Bhatia and Vivek
Bhatia decided to start an online auto portal. At that time, there were no
major players in the market and they saw an opportunity to fill the gap.
They used a user-friendly website and mobile app which made it easy for
users to research and buy cars. It was converted into a company Car
Easy Ltd.' in 2018.
From the following Balance Sheet of the company as on 31st March, 2022,
caleulate Cash Flows From Operating Activities'.
Balance Sheet of Car Easy Ltd' as at 31st March, 2022
Note 31.3.2022 31.3.2021
Particulars
No.

I- Equity and Liabilities :

1. Shareholders' Funds
(a) Share Capital 9,00,000 3,00,000
(b) Reserves and Surplus 1 75,000 3,60,000
2. Non-Current Liabilities

Long-term Borrowings 2 2,40,000 1,80,000

3. Current Liabilities
(a) Trade Payables 18,000 60,000
(b) Short-term Provisions 3 2,04,000 2,10,000
Total 14,37,000 11,10,000
II-Assets :
1. Non-Current Assets
Fixed Assets 4 10,08,000 5,76,000
2. Current Assets
(a)Inventories 3,54,000 3,87,000
(b) Cash and Cash
Equivalents 75,000 1,47,000
Total 14,37,000 11,10,000

67/1/1 Page 33 P.T.0.

Notes to Accounts :
Note 31.3.2022 31.3.2021
No. Particulars

Reserve and Surplus

Surplus i.e. Balance in Statement of
Profit and Loss 75,000 3,60,000
75,000 3,60,000
2 Long-term Borrowings
10% Debentures 2,40,000 1,80,000

2,40,000 1,80,000
Short-term Provisions

Provision for Tax 2,04,000 2,10,000

2,04,000 2,10,000
4 Fixed Assets

Machinery 11,52,000 6,45,000

Accumulated Depreciation (1,44,000) (69,000)

Total 10,08,000 5,76,000
Additional Information :
(i) 10% Debentures were issued on 31st March, 2021.
(iü) Tax of 80,000 was paid during the year. 6
34. Q. Read the following hypothetical text and .....

18

Ans.
Calculation of 'Cash Flows from operating activities
for the year ended 31st March, 2022
Details Amount
Particulars
() ?)
Net profit before tax and extraordinary items (2,11,000)
Add: Non-cash and Non-operating expenses :
Depreciation on machinery 75,000
Interest on Debentures 24,000 1 99,000
Net profit before changes in working capital (1,12,000)
Add: Decrease in Current Assets and
Increase in Current Liabilities:
Decrease in Inventories 33,000

Less : Increase in Current Assets and

Decrease in Current Liabilities:
Trade Payables (42,000)
(9,000)
Cash generated from operations (1,21,000)

Less : Tax paid (80,000)

Net cash outflow/used in operating activities (2,01,000)

Dr. Provision for Tax A/c Cr.

Particulars (3) Particulars ()
To Bank A/c 80,000 By Balance b/d 2,10,000
To Balance c/d 2,04,000 By Statement of Profit & 74,000
Loss
2,84,000 2,84,000

Working Notes:
Calculation of net profit before tax :
(7)
Net Profit (2,85,000)

19

Add provision for Tax 74,000

(2,11,000)
6
(Note: Fullcredit to be given if the examinee has taken interest on debentures as marks
7 18,000 and consequently, net cash outflow/used in operating activities has been
calculated as 2,07,000)
34. Read the following hypothetical text and answer the given question on the
basis of the same.
Sujata started a small enterprise under the 'Skill India Scheme'. As the
business grew, the revenue started increasing and she decided to form
Sujata Ltd.' to achieve her objectives with 10 other like minded persons.
The financial position of the company is given in its Balance Sheet as at
31.3.2022: 6
Balance Sheet of Sujata Ltd. as at 31st March, 2022
Particulars Note 31.3.2022 31.3.2021
No. () )
I. Equity and Liabilities
1. Shareholders' Funds
(a) Equity share capital 20,00,000 17,00,000
(b) Reserves and Surplus 3,00,000 4,00,000
(Statement of Profit and Loss)
2. Non-current Liabilities
Long term Borrowings 3,00,000 2,00,000
3. Current Liabilities
Trade payables 50,000 25,000
Total 26,50,000 23,25,000
II. Assets
1 Non-current Assets
(a) Fixed Assets
(i) Tangible Assets 8,00,000 9,00,000
(ii) Intangible Assets 5,00,000 2,00,000
(b) Non-current Investments 3,00,000 4,00,000
2 Current Assets
(a) Inventories 4,00,000 5,00,000
(b) Trade Receivables 1,50,000 1,25,000
(c) Cash & Cash equivalents 5,00,000 2,00,000
Total 26,50,000 23,25,000
Additional Information :
Depreciation of ? 1,00,000 was charged on Tangible Assets during the
year.
On the basis of the above information prepare the Cash Flow Statement'
of Sujata Ltd.

67/2/1 Page 27 P.T.0.

34 Q. Read the following.
Ans. Cash low statement (As per AS 3 revised)
for the year ended 31st March 2022
Amount Amount
Particulars

Cash flow from Operating

Activities
Net loss before Tax (1,00,000)
Adjustment for Non-cash and
Non-operating items
Add :Depreciation 1,00,000

Operating profit before change in Nil

Working Capital

Add Decrease in Current Assets

Increase in Current Liability

Inventories 1,00,000
17

Trade payable 25,000 1,25,000

Less Increase in Current Assets
Decrease in Current Liability
Trade Receivable (25,000)
New Cash flow from Operating
Activities
I,00,000

Cash flows from Investing

Activities :

Purchase of Intangible Assets (3,00,000)

Sale of Non-current Investment
1,00,000
6
Net Cash used in Investing (2,00,000) Marks
Activities

Cash flow from Financing

Activities :

Issue of Share Capital 3,00,000

Procecds from long-term
Borrowings 1,00,000
Cash flow from Financing
4,00,000
Activity
Net Increase in Cash and Cash
Equivalents 3,00,000 A
(A+B+ C)
Cash and Cash Equivalents in the
2,00,000
beginning
Cash and Cash Equivalents in the 5,00,000
end
34. Read the following hypothetical text and answer the given question on
this basis :
Azad, inspired by Make-in-India' mission, initiated his start-up in the
form ofa company 'Azad Ltd.' along with six other promoters in 2016.
The company has been earning good revenue consistently. The financial
position of AzadLtd. as at 31st March, 2022 was as follows :
Balance Sheet of Azad Ltd. as at 31St March, 2022
Particulars
Note 31.3.2022 31.3.2021
No.

I- Equityand Liabilities :
1. Shareholders' Funds

(a) Share Capital 19,00,000 17,00,000

(b) Reserves and Surplus 1 6,00,000 3,00,000
2 Non-Current Liabilities
Long-term Borrowings 5,00,000 4,00,000
3. Current Liabilities
(a) Short-term Borrowings 3 1,70,000 1,75,000
(b) Short-term Provisions 2,00,000 1,65,000
Total 33,70,000 27,40,000
II-Assets :
1. Non-Current Assets
(a) Fixed Assets

(i) Tangible Assets 24,00,000 19,00,000

(ü) Intangible Assets 6 4,00,000 3,00,000
(b) Non-current Investments 1,00,000 2,00,000
2 Current Assets
(a) Current Investments 1,40,000 1,70,000
(b) Inventories 2,60,000 1,30,000
(c) Cash and Cash
Equivalents 70,000 40,000
Total 33,70,000 27,40,000
67/3/1 Page 33 P.T.O.
 Notes to Accounts:
Note 31.3.2022 31.3.2021
No.

(1) Reserves and Surplus 6,00,000 3,00,000

(Surplus i.e. Balance in Statement
of Profit and Loss)
(2) Long-term Borrowings
12% Debentures 5,00,000 4,00,000
(3) Short-term Borrowings
Bank Overdraft 1,70,000 1,75,000
(4) Short-term Provisions
Provision for Tax 2,00,000 1,65,000
(5) Tangible Assets

Machinery 26,00,000 20,00,000

Less Accumulated Depreciation (2,00,000) (1,00,000)

24,00,000 19,00,000
6 Intangible Assets
Goodwill 4,00,000 3,00,000

Additional Information :
(i) 1,00,000, 12% Debentures were issued on 18t April, 2021.
(ii) A piece of machinery costing 80,000 on which accumulated
depreciation was 40,000, was sold at a gain of 10,000.

Calculate cash flows from 'Investing Activities' and Financing Activities'. 6

67/3/1 Page 35 P.T.O.

34 Q. Read the following hypothetical text...

Ans. Azad Ltd.

Cash Flows from Investing Activities
Particulars Details Amount

Purchase of Machinery (6,80,000)

Sale of Machinery S0,000 (2 %)
(1,00,000)
Purchase of Intangible Assets
Sale of Non- Current Investments L.00,000
Net Cash used in Investing Activities (6,30,000)
+
Cash Flows from Financing Activities
Particulars Details Amount

Proceeds from issue of share capital 2,00,000

Proceeds from 12% Dcbentures 1,00,000
Repayment of Bank Overdraft (2 ½ )
(5,000)
Payment of Interest on 12% Debentures (60.000)
Net Cash inflow from Financing Activities 2,35,000

Working Notes:
Dr Machinery Ale Cr
Particulars Amount Particulars Amount

To Bal b/d 20,00,000 By Accumulated

To Gain on sale of Depreciation A/e 40,000
Machinery Alc 10,000 By Bank Alc 50,000
To Bank (b/) 6,80,000 By Bal cld 26,00,000
(purchase )
26.90.000 26,90,000

23

Dr Accumulated Depreciation A/c Cr

Particulars Amount Particulars Amount

To Accumulated By Bal b/d 1,00,000

Depreciation A/c 40,000 By Depreciation A/c /
Statement of Profit & Loss 6 marks
To Bal c/d 2,00,000 1,40,000

2,40,000 2,40,000
34. Read the following hypothetical text and answer the given question on
this basis :
Madhav is a young entrepreneur. On 1st April, 2019, he formed a
partnership firmn with two of his friends, Mohan and Sohan. They started
their business of exporting dry fruits. Their business was a successful
business. Now they wanted to expand the business in many other
countries. For meeting the financial requirements, they changed the form
of business organisation and formed Madhav Ltd. The Balance Sheet of
Madhav Ltd. as at 31.3.2022 was as follows
Balance Sheet of Madhav Ltd. as at 31st March, 2022
Note 31.3.2022 31.3.2021
Particulars
No.
I- Equity and Liabilities :
1. Shareholders' Funds
(a) Share Capital 35,00,000 25,00,000
(b) Reserves and Surplus
(Statement of P & L) 12,50,000 10,00,000
2. Non-Current Liabilities
Long-term Borrowings 12,50,000 3,50,000
(10% Debentures)
3. Current Liabilities
(a) Short-term Borrowings
(Bank Overdraft) 50,000 75,000
(b) Trade Payables 2,50,000 1,50,000
(c) Short-term Provisions 1 1,50,000 75,000
Total 64,50,000 41,50,000
II Assets :
1. Non-Current Assets
Fixed Assets
(a)Tangible Assets 2 40,00,000 22,50,000
(b) Intangible Assets 3,50,000 5,00,000
(Goodwill)
2. Current Assets
(a) Inventories 6,25,000 5,00,000
(b) Trade Receivables 12,50,000 7,50,000
(c) Cash and Cash
Equivalents 2,25,000 1,50,000
Total 64,50,000 41,50,000

67/4/1 Page 33 P.T.O.

Notes to Accounts :
Note 31.3.2022 31.3.2021
No. Particulars Amount Amount

1 Short term Provisions

Provision for Tax 1,50,000 75,000
2 Tangible Assets
Plant and Machinery 44,00,000 25,00,000
Less Accumulated Depreciation (4,00,000) (2,50,000)
40,00,000 22,50,000

Additional Information :
i) A part of the machine costing 1,25,000 accumulated depreciation
thereon being 50,000 was sold for 45,000 during the year.
(ii) Interest of 1,25,000 was paid on Debentures.
Calculate cash flows from Investing activities' and Financing activities'
of Madhav Ltd. from the information provided above. 6
34 Q. Read the following hypothetical text...
Madhav is a young entrepreneur
Ans.

Cash flows from Investing activities

Particulars Details Amount

Sale of machinery 45,000

Purchase of machinery (20,25,000)

Cash used in investing activities (19,80,000)

Cash flows from Financing activities

Particulars Details Amount

Issue of shares 10,00,000

10% Debentures issued 9,00,000

Interest on debentures paid (1,25,000)
2½
Payment of Bank Overdraft (25,000)
Cash flows from Financing activities 17,50,000

Working notes:
Dr. Plant & Machinery Alc Cr.
Particulars Particulars
To Balance b/d 25,00,000 By Accumulated
To Bank Alc 20,25,000 Depreciation A/c 50,000 1½
(Purchasc-Bal.Fig) By Bank Ale 45,000
By Statement of P & L 30,000
(Loss on salc A/c)
By Balance cld 44,00,000
45,25,000 45,25,000

Page 21 of 24

Dr. Accumulated Depreciation Ale Cr.

Particulars Particulars
To Machinery A/c 50,000 By Balance b/d 2,50,000
To Balance c/d 4,00,000 By Depreciation A/c 2,00,000
2+2%
4.50.000 4.50.000 +1 ½
-6
marks
34. Read the following hypothetical text and answer the questions given
below on the basis of the same :
Aditi, initiated her start-up 'Fizz Ltd.' in 2019. Fizz Ltd.' is an
organic juice extracting unit. Its profits are increasing year-after-year
because of the increasing awareness towards health.
Following information has been extracted from the Balance Sheet of Fizz
Ltd.' for the year ended 31 March, 2022 :
31t March, 2022 31*t March, 2021
() ()
Equity Share Capital 90,00,000 60,00,000
11% Debentures 30,00,000 50,00,000
Machinery (at cost) 28,00,000 20,00,000
Accumulated Depreciation on
Machinery 90,000 60,000

67/5/1 Page 35 P.T.0.

Additional Information:
(1) During the year, a machine costing ? 4,00,000 was sold at a gain of
730,000.
(ii) Depreciation charged on machinery during the year was 50,000.
(iii) Interest paid on 11% debentures amounted to ? 5,50,000.
(iv) Dividend of ? 3,00,000 was paid on equity shares.
(v) Debentures were redeemed at a premium of 10% on 31t March, 2022.
Calculate cash flows of Fizz Ltd.' from Investing Activities' and
Financing Activities.'
34 Q. Read the following hypothetical text and answer the questions

Ans.

Dr. Machinery Account Cr.

Particulars Amount () Particulars Amount )
To Balance b/d 20,00,000 By Accumulated
Depreciation A/c 20,000
To Statement of P/L (gain) 30,000 By BankAc(sale) 4,10,000
To Bank A/c (purchase) 12,00,000 By Balance c/d 28,00,000
32,30,000 32,30,000

Dr. Accumulated Depreciation on Machinery Account Cr.

Particulars Amount ) Particulars Amount (()
To Machinery A/c 20,000 By Balance b/d 60,000 1/2
To Balance c/d 90,000 By Depreciation A/c 50,000
1,10,000 1,10,000

Cash Flow from Investing Activities

Particulars Amount )
Purchase of Machinery (12,00,000)
Sale of Machinery 1%
4,10,000
Net cash used in investing activities (7,90,000)

Cash Flow from Financing Activities

Particulars Amount( )
Redemption of 11% Debentures (20,00,000)
Premium on Redemption of 11% Debentures (2,00,000)
Interest Paid on 11% Debentures (5,50,000) 1 +
Issue of equity share capital 30,00,000 A1 +
Dividend paid on Equity Shares (3,00,000)
1
Net cash used in financing activities (50,000)
=6
Note- If an examinee has prepared Machinery Disposal Account, due credit is to be given. marks