CASH FLOW STATEMENT

(1) Cash Flow from Operating Activities

(2) Cash Flow from Investing Activities
(3) Cash Flow from Financing Activities

Cash Flow from Operating Activities

Particulars Amt. (Rs.) Amt. (Rs.)
(A) Net Profit/Net Loss as per P&L A/c XXX/(XXX)
Add: General Reserve XXX
Provision for Tax XXX
Proposed Dividend XXX
(B) Profit/Loss before Tax & Dividend XXX/(XXX)
Add: Non-operating Expenses XXX
Depreciation XXX
Loss on Sale of Fixed Assets XXX
Goodwill Written Off XXX
Preliminary Expenses Written Off XXX
Interest on Long-term Borrowings XXX
Discount on Issue of Debentures XXX
Premium on Redemption of Debentures XXX
Premium on Redemption of Preference Shares XXX
Less: Non-operating Incomes
Profit on Sale of Fixed Assets (XXX)
Interest on Investments (XXX)
Rent (XXX)
(C) Operating Profit/Loss before Working Capital Changes XXX/(XXX)
Add: Decrease in Current Assets(1) & Increase in Current Liabilities(2) XXX
Less: Increase in Current Assets & Decrease in Current Liabilities (XXX)
(D) Cash from / used in Operating Activities XXX/(XXX)
Less: Tax Paid (XXX)
(E) Net Cash from / used in Operating Activities XXX/(XXX)

(1) All Current Assets except Cash, Bank & Marketable Securities.
(2) All Current Liabilities except Provision for Tax & Proposed Dividend.

Special Treatment of Provision for Tax (If there is no Adjustment)

1) Current Year Balance (Closing): Added with Net Profit/Net Loss as per P&L A/c (Provision
made).
2) Previous Year Balance (Opening): Subtracted from Cash from / used in Operating Activities
(Tax paid).

Special Treatment of Proposed Dividend (Irrespective of Adjustment)

Proposed Dividend of the Current Year will not be considered while preparing the Cash Flow
Statement.
1) Proposed Dividend of the previous year will be added to net Profit under Operating Activities.
2) Same amount (Proposed Dividend of the Previous Year) will have to be deducted under
Financing Activities.
OR
1) Current Year Balance (Closing): Added with Net Profit/Net Loss as per P&L A/c.
2) Previous Year Balance (Opening): Subtracted from Financing Activities.
 Cash Flow from Investing Activities
Particulars Amt. (Rs.) Amt. (Rs.)
Purchase of Fixed Assets (XXX)
Sale of Fixed Assets XXX
Purchase of Investments (XXX)
Sale of Investments XXX
Purchase of Goodwill (XXX)
Interest on Investments XXX
Net Cash from / used in Investing Activities XXX/(XXX)

Cash Flow from Financing Activities

Particulars Amt. (Rs.) Amt. (Rs.)
Issue of Equity Shares XXX
Issue of %Preference Shares XXX
Redemption of %Preference Shares (XXX)
Issue of %Debentures XXX
Redemption of %Debentures (XXX)
Bank Loan XXX
Payment of Loan (XXX)
Interest on Long-term Borrowings (XXX)
Premium on Redemption of Debentures (XXX)
Premium on Redemption of Preference Shares (XXX)
Proposed Dividend (XXX)
Interim Dividend (XXX)
Net Cash from / used in Financing Activities XXX/(XXX)
 XYZ Ltd.
Cash Flow Statement
for the year ended…
Particulars Amt. (Rs.) Amt. (Rs.)
(1) CASH FLOW FROM OPERATING ACTIVITIES XXX/(XXX)
Net Profit/Net Loss as per P&L A/c XXX/(XXX)
Add: General Reserve XXX
Provision for Tax XXX
Proposed Dividend XXX
Profit/Loss before Tax & Dividend XXX/(XXX)
Add: Non-operating Expenses XXX
Depreciation XXX
Loss on Sale of Fixed Assets XXX
Goodwill Written Off XXX
Preliminary Expenses Written Off XXX
Interest on Long-term Borrowings XXX
Discount on Issue of Debentures XXX
Premium on Redemption of Debentures XXX
Premium on Redemption of Preference Shares XXX
Less: Non-operating Incomes
Profit on Sale of Fixed Assets (XXX)
Interest on Investments (XXX)
Rent (XXX)
Operating Profit/Loss before Working Capital Changes XXX/(XXX)
Add: Decrease in Current Assets & Increase in Current Liabilities XXX
Less: Increase in Current Assets & Decrease in Current Liabilities (XXX)
Cash from / used in Operating Activities XXX/(XXX)
Less: Tax Paid (XXX)
Net Cash from / used in Operating Activities XXX/(XXX)
(2) CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (XXX)
Sale of Fixed Assets XXX
Purchase of Investments (XXX)
Sale of Investments XXX
Purchase of Goodwill (XXX)
Interest on Investments XXX
Net Cash from / used in Investing Activities XXX/(XXX)
(3) CASH FLOW FROM FINANCING ACTIVITIES
Issue of Equity Shares XXX
Issue of %Preference Shares XXX
Redemption of %Preference Shares (XXX)
Issue of %Debentures XXX
Redemption of %Debentures (XXX)
Bank Loan XXX
Payment of Loan (XXX)
Interest on Long-term Borrowings (XXX)
Premium on Redemption of Debentures (XXX)
Premium on Redemption of Preference Shares (XXX)
Proposed Dividend (XXX)
Interim Dividend (XXX)
Net Cash from / used in Financing Activities XXX/(XXX)
Net Increase / Decrease in Cash & Cash Equivalents (1 + 2 + 3) XXX/(XXX)
Add: Cash & Cash Equivalents in the Beginning of the Year XXX
Cash & Cash Equivalents at the End of the Year XXX

Cash & Cash Equivalents in the Beginning= Previous Year (Opening) Balance of Cash +
Bank + Marketable Securities.
Cash & Cash Equivalents in the End= Current Year (Closing) Balance of Cash + Bank +
Marketable Securities.
 Ques.) From the following Balance Sheets of A Ltd. Prepare Cash Flow Statement.
Balance Sheet (in Rs. Lakhs)
Liabilities 2022 (Rs.) 2023 (Rs.) Assets 2022 (Rs.) 2023 (Rs.)
Equity Capital 30000 40000 Plant 8000 20000
8% Preference Capital 15000 10000 Goodwill 31500 26000
Fund Reserve 4000 7000 Investment 2000 3000
Profit and Loss A/c 7200 9800 Debtors 16000 20000
Creditors 5500 8300 Cash 1500 1000
Bill Payable 2000 1600 Bank 1000 800
Income tax Payable 6000 8000 Bill Receivable 2000 3000
Stock 7700 10900
Total 69700 84700 Total 69700 84700

Sol.) A Ltd.
Cash Flow Statement
for the year ended 2023 (in Rs. Lakhs)
Particulars Amt. (Rs.) Amt. (Rs.)
(1) CASH FLOW FROM OPERATING ACTIVITIES
Net Profit as per P&L A/c 2600
Add: General Reserve 3000
Provision for Tax 8000
Profit/Loss before Tax & Dividend 13600
Add: Non-operating Expenses
Goodwill Written Off 5500
Less: Non-operating Incomes -----
Operating Profit before Working Capital Changes 19100
Add: Decrease in Current Assets & Increase in Current Liabilities
Creditors 2800
Less: Increase in Current Assets & Decrease in Current Liabilities
Debtors (4000)
Bill Receivable (1000)
Stock (3200)
Bill Payable (400)
Cash from Operating Activities 13300
Less: Tax Paid (6000)
Net Cash from Operating Activities 7300
(2) CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Plant (12000)
Purchase of Investments (1000)
Net Cash used in Investing Activities (13000)
(3) CASH FLOW FROM FINANCING ACTIVITIES
Issue of Equity Shares 10000
Redemption of 8%Preference Shares (5000)
Net Cash from Financing Activities 5000
Net Decrease in Cash & Cash Equivalents (1 + 2 + 3) (700)
Add: Cash & Cash Equivalents in the Beginning of the Year 2500
Cash & Cash Equivalents at the End of the Year 1800