Cash Flow Statement (Format) for the year ended……………….

particulars Rs
1 Cash Flow from operating activities
net profit (closing balance-opening balance)
add Transfer to reserve
Proposed dividend for current year
Interim dividend during the current year
Provision for tax made during current year
Extraordinary items if debited to P &L account
less Extraordinary items if credited to P &L account
Refund of tax credited to P & L account
(A) Net Profit before taxation and extraordinary items
(B) Add: Items to be added
Depreciation
Preliminary expenses/ discount on issue of shares and debentures written off
Goodwill, patents and trademarks amortised
Interest on borrowings and debentures
Loss on the sale of fixed asset
(C) less: items to be deducted
interest income
dividend income
rental income
profit on sale of fixed assets
(D) Operating profit before working capital changes (A+B-C)
(E) Add: Decrease in current assets and increase in current liabilities
Decrease in stock/inventories
Decrease in debtors /bills receivables
Decrease in accrued incomes
Decrease in prepaid expenses
Increase in creditors/ bills payable
Increase in oustanding expenses
increase in outstanding expenses
increase in advance income
increase in provision for doubtful debts
(F) Increase in current assets and decrease in current liabilities
increase in stock/inventories
increase in debtors /bills receivables
increase in accrued incomes
increase in prepaid expenses
decrease in creditors/ bills payable
decrease in oustanding expenses
decrease in outstanding expenses
decrease in advance income
decrease in provision for doubtful debts

(G) Cash generated from operations (D+E-F)

(H) Less: Income tax paid (net of tax fund received)
(I) Cash flow before extraordinary items (=/-)
 (J) Net cash flow from operating activities

II Cash flow from investing activities

add proceeds from sale of fixed assets
proceeds from sale of investments
proceeds from sale of intangible assets
interest and didividend received ( for non finance companies)
rent income
Less purchase of fixed asset
purchase of investments
purchase intangible assets like goodwill
Net cash from investment activities
III Cash flow from financing activities
add proceeds from issue of shares and debentures
proceeds from other long term borrowings
less final dividend paid
interim dividend paid
interest on debentures and loans paid
repayment of loans
redemption of debentures/ preference shares
Net cash from financing activities

IV Net cash flow from operating, investing and financing activities(I+II+III)

V add cash and cash equivalent in the beginning of the year
cash in hand
cash at bank (less bank overdraft)
short term deposits
marketable securities

VI Cash and cash equivalent at the end of the year

cash in hand
cash at bank (less bank overdraft)
short term deposits
marketable securities

IV + V = VI
net cash flow + opening balance = closing balance
 When the fixed asset is shown at the Written Down Value

Fixed Asset Account (At written down value)

Dr Cr
particulars Rs Particulars Rs
To balance b/d By Bank A/c(sale of fixed asset)
To bank A/c (purchase) By P&L a/c (loss on sale of asset)
To profit and Loss A/c (profit onBy
thedepreciation
sale of the asset)
By balance c/d

2006 2007
Problem written down value of plant and machinery 860000 950000
Depreciation for the year Rs40000
At the beginning of the year , a part of the plant was sold for Rs 25000 which had a written down value of R
Find the net cash flow from investing activities

Solution Plant and machinery account

To Balance b/d 860000 By bank a/c 25000

To P&L account (profit on the
5000sale
By of
depreciation
fixed asset) 40000
To bank a/c (purchase of150000
fixed asset)
By balance c/d 950000
1015000 1015000

Cash flow from investing activities

Particulars
Cash Payment to acquire plant and machinery-150000
Cash receipts from sale of plant and machinery
25000
Net cash flow from investing activities -125000
written down value of Rs 20000
 When fixed assets are shown at originalcost and accumulated depreciation (provision for depreciation ) is

Fixed Asset account (at cost)

Dr Cr
Particulars Rs particulars Rs
To balance b/d By bank a/c(sale of fixed asset)
To p&l a/c ( profit on the sale of By
fixed
accumulated
asset) depreciation a/c (accumulated depreciation on fixed asset
To bank a/c( purchase of fixed asset)
By P&L a/c (loss on sale of fixed asset)
By balance c/d

accumulated depreciation account

Dr
particularsRs ParticularsRs
To fixed asset a/c ( accumulated depreciation
By balance
on fixedb/d
asset sold0
To balance c/d By P&L a/c (depreciation charged for current year)

Problem Particulars Opening Closing

machinery (at cost) 400000 420000
accumulated depreciation
100000 110000
patents 280000 160000

during the year , a machine costing Rs 40000 with this accumulated depreciation Rs 24000 was sold for Rs
patents were written off to the extent of rs 40000 and some patents were sold at a profit of rs 20000
Find the net cash flow from investment activities

Solution machinery account

Dr Cr
Particulars pariculars
To balance b/d 400000 By bank a/c 20000
To P&L a/c (Profit on sale of
4000
machinery)
By acc. Depreciation)
24000
To bank a/c (balancing figure)
60000 By balance c/d420000
464000 464000

profit sale price- book value of machinery (40000-24000=16000)

20000-16000=4000

Accumulated Depreciation a/c

Dr Cr
particulars Rs Particulars Rs
To machinery a/c (depreciation
24000 By
on machinery
balance b/dsold) 100000
To balance c/d 110000 By P&L a/c (balancing) 34000
134000 134000

Patents a/c
Dr Cr
Particulars
To balance b/d280000 By Bank a/c (balancing) 100000
To P &L a/c (profit
20000given)
By P&L a/c (written off) 40000
By balance c/d 160000
300000 300000

Cash flow from investing activities

Particulars Rs
Inflow from sale of machinery 20000
Outflow on purchase of machinery -60000
Inflow from sale of patents 100000
60000
ion for depreciation ) is separately maintained

reciation on fixed asset sold)

s 24000 was sold for Rs 20000

rofit of rs 20000
Problem particulars 2008 2009
250000
Investments @ 10% 500000
fixed asset 875000 1190000

Additional Information
Half of the investment held in the beginning of the year were sold at 10% profit
depreciation on fixed asset was Rs 10000 for the year
interest received on investments rs 35000
dividend received on investments rs 15000
rent received rs 10000

Solution Investment Account

Dr Cr
particulars Rs particulars Rs
To balance b/d 250000 By bank a/c (sale) 137000
To P&L a/c(profit on sale)12500 By balance c/d 500000
To bank a/c(purchase of375000
investment)
637500 637000

Fixed Asset A/c

ParticularsRs particularsRs
To balance b/d875000 By depreciation
100000
To bank a/c 415000 By balance c/d
1190000
1290000 1290000

Cash flow from investment activities

proceeds from saleof investments 137500

purchase of investments -375000
purchase of fixed asset -415000
interest received 35000
dividend received 15000
rent received 10000
cash flow from investment -592500
Problem
particulars 2007 2008
Equity share capital 400000 500000
10% debenture 150000 100000
Securities premium 40000 50000

Interest paid on debentures Rs10000

Find cash flow from financing activities

solution Particulars
Cash inflow from issue of shares (including premium) 110000
Interest paid on debentures -10000
Redemption of debentures -50000
net cash flow from financing activities 50000
Problem Particulars 2006 2007
equity share capital 1000000 1500000
10% debentures 100000
8% debentures 200000

Interest paid on debentures Rs 10000

Dividend paid rs 50000
during the year 2006-2007, company issued bonus shares in the ratio of 2:1 by capitalizing reser

solution Particulars
Cash proceeds from the issue 8% of debentures 200000
redemption of 10% debentures -100000
Interest paid -10000
dividend paid -50000
Net cash flow from financing activities 40000

bonus shares is not to be shown in the cash flow statement because there is no no cash flow
2:1 by capitalizing reserve

re is no no cash flow