Cash Flow Statement — Class 12 Accountancy PYQs

Statement-I : Snow Limited earned a profit of ₹ 2,00,000 after charging depreciation of ₹ 50,000 on machinery. So, operating profit before working capital changes would be ₹ 2,50,000.
Statement-II : Depreciation is added back to net profit as it does not result in any cash flow.
Choose the correct option from the following :
(A) Only Statement-I is true.
(B) Only Statement-II is true.
(C) Both the Statements are false.
(D) Both the Statements are true.

(a) Which of the following are operating activities for the purpose of preparing cash flow statement ?
(i) Cash payments to suppliers for goods and services.
(ii) Dividend received from investments in other enterprises.
(iii) Cash receipts from royalties, fees, commissions and other revenues.
(iv) Cash repayments of amounts borrowed.
(A) (i), (ii) and (iii)
(B) (i) and (iii)
(C) (i), (iii) and (iv)
(D) (iii) and (iv)
OR
(b) Which of the following statements is incorrect ?
(A) Payment of dividend and interest will result in cash outflow from financing activities.
(B) Payment of employee benefit expenses will result in cash outflows from operating activities.
(C) Receipt of interest and dividend will result in cash inflow from financing activities.
(D) Operating activities are the principal revenue generating activities of the enterprise.

Statement - I : Investing activities are the acquisition and disposal of long term assets and other investments not included in cash equivalents.
Statement - II : Cash payments to acquire fixed assets including intangibles and capitalised research and development results in cash outflow from investing activities.
Choose the correct option from the following :
(A) Both the Statements are true.
(B) Both the Statements are false.
(C) Only Statement I is true.
(D) Only Statement II is true.

On 31st March, 2024 following is the Balance Sheet of Bhavik Limited :

Bhavik Ltd.
Balance Sheet as at 31st March, 2024

Particulars	Note No.	31-03-2024 (₹)	31-03-2023 (₹)
I. Equity and Liabilities
1. Shareholders' Funds
(a) Share Capital		12,00,000	10,00,000
(b) Reserves and Surplus	1	4,00,000	3,00,000
2. Non-Current Liabilities
Long-term Borrowings	2	6,00,000	10,00,000
3. Current Liabilities
(a) Trade Payables		5,00,000	1,00,000
(b) Short-term Provisions	3	3,00,000	4,00,000
Total		30,00,000	28,00,000
II. Assets
1. Non-Current Assets
(a) Property, Plant and Equipment	4	19,00,000	15,00,000
(b) Non-Current Investments		3,00,000	4,00,000
2. Current Assets
(a) Inventories		4,50,000	3,50,000
(b) Trade Receivables		2,50,000	4,50,000
(c) Cash and Cash Equivalents		1,00,000	1,00,000
Total		30,00,000	28,00,000

Notes to Accounts

Note No.	Particulars	31-03-2024 (₹)	31-03-2023 (₹)
1	Reserves and Surplus
	Balance in Statement of Profit and Loss	4,00,000	3,00,000
2	Long-term Borrowings
	10% Debentures	6,00,000	10,00,000
3	Short-term Provisions
	Provision for Tax	3,00,000	4,00,000
4	Property, Plant and Equipment
	Plant and Machinery (Gross Block)	21,50,000	16,00,000
	Less: Accumulated Depreciation	(2,50,000)	(1,00,000)
	Net Block	19,00,000	15,00,000

Additional Information :

(i) During the year, a piece of machinery costing ₹ 8,00,000, accumulated depreciation thereon ₹ 50,000, was sold for ₹ 6,50,000.

(ii) Debentures were redeemed on 31-03-2024.

Calculate :

(a) Cash Flows from Investing Activities

(b) Cash Flows from Financing Activities

Identify which of the following transactions will result in 'Cash Inflow From Operating Activities' :
(A) Payment to creditors
(B) Interest received by a non-finance company
(C) Dividend received by a non-finance company
(D) Amount received from debtors

(a) The transaction 'Acquisition of machinery by issue of equity shares of ₹ 5,00,00,000' will result in :
(A) Cash inflow of ₹ 5,00,00,000 from financing activities
(B) Cash outflow of ₹ 5,00,00,000 from financing activities
(C) Cash outflow of ₹ 5,00,00,000 from investing activities
(D) No flow of cash

(b) The transaction 'Capital Gains Tax paid on sale of fixed assets' is classified under which of the following :
(A) Operating Activities
(B) Investing Activities
(C) Financing Activities
(D) Cash and Cash Equivalents

From the following information, calculate 'Cash Flows From Operating Activities' :

Particulars	Amount (₹)
Surplus i.e. Balance in Statement of Profit and Loss	6,28,000
Provision for Tax	1,50,000
Proposed Dividend for the previous year	72,000
Depreciation	1,40,000
Loss on Sale of Machinery	30,000
Gain on Sale of Investments	20,000
Dividend Received on Investments	6,000
Increase in Current Liabilities	1,61,000
Increase in Current Assets (other than cash and cash equivalents)	6,00,000
Decrease in Current Liabilities	64,000
Income Tax Paid	1,18,000

(i) Statement I : Issue of Debentures will result in inflow of cash.
Statement II : Issue of Debentures to the vendors for purchase of machinery will result in outflow of cash.
Choose the correct option from the following :
(A) Both statements are correct.
(B) Both statements are incorrect.
(C) Statement I is correct and Statement II is incorrect.
(D) Statement I is incorrect and Statement II is correct.

(ii) What will be effect of 'Purchase of Marketable Securities for Cash' on Cash Flow Statement ?
(A) No effect
(B) Inflow from financing activities
(C) Outflow from investing activities
(D) Outflow from financing activities