CASH FLOW STATEMENT

FOR THE YEARENDED

(Revised), Indirect Method)
(As per AS-3 Details Amount
Particulars
(A) CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax and extraordinary Items (Working Note No. 1)
Adjustment For:
Expenses ( already debited to Statement of P/L)
(+) Non Operating Expenses and Non Cash
Depreciation on fixed tangible assets
Trademark, Patent Right, Copy Right)
Intangible assets written off (Goodwill,
comm./Share issue Exps./Discount on issue of
Preliminary Expenses/Underwriting
Debentures written off
Loss on sale of fixed assets
Loss on sale of investment
Overdraft/Cash Credit
Interest on Debentures / loans/Bank
debentures
Premium on redemptions on preference shares and
Discount on debtors
Provision for doubtful debts (Increase)/ Provision for
Foreign exchange (DR.)
statement of P/L)
(--) Non Operating Incomes (already credited to ()
Interest Received
Dividend Received
Rent Received
Gain on sale of fixed assets
Gain on sale of investment
Foreign exchange (Cr.)
for Discount on Debtors
Provision for doubtful debts (Decrease)/Provision
Re-transfer of Excess Provision

Changes
Qperating profit before Working Capital WC)
Increase in Current Liabilities (Decrease in
(+) Decrease in Current Assets and
Expenses
(Inventories, Trade Receivable, Prepaid
Trade Payable, O/S Expenses) Liabilities(Increase in WC)
and Decrease in Current
(--) Increase in Current Assets
Expenses
(Inventories, Trade Receivable, Prepaid
Trade Payable, O/S Expenses)
Operation
Cash generated from tax)
(TaxX paid-Refund of income
(--) Net of Income tax paid
items
Cash flowbefore extraordinary and Loss
incomes credited to Statement of Profit
(+) Extraordinary items of Profit and LOss
expense debited to Statement of
(--) Extraordinary items of ACTIVITIES
FROM OPERATING
NET CASH FLOW (USED)
 Equipment
INVESTING ACTIVITES Plant and Equipment
(B)CASH FLOW FROM assets/Sale of Property, Property, Plant and
Sale of Tangible Fixed Purchasesof
Purchase ofiTangible Fixed assets/
Sale of Intangible Assets
Purchase of Intangible Assets
Investment/Non-Current Investment
Sale of Investment
Non-Current
Purchase of investment/ Short Term
repayments received/ Long term and
advances
Loans and term and Short Term
granted to others/ Long
Loansand advances
investment
Dividend received on shares held as
Interest Received on investment
property held as investment
Rent received from immovable
our intangible assets
Amount received from others by using
Capital gain tax paid on sale of assets
fire
Compensation received due to assets destroyed by
ACTIVITIES
NET CASH FLOW FROM (USED IN) INVESTING

ACTIVITES
(C) CASH FLOW FROM FINANCING
[F.V.+ Premium - Share Issue Expense)
Issue of Share Capital (Equity or Preference)
redemption)
Redemption of Preference Shares (F.V. + Premium on
Discount)
Issue of Debentures/ Loans (F.V. + Premium -
Redemption of Debentures (F.V. + premium of redemption)
Raising Loans/ Long Term or Short Term
Repayments of Loans/ Long Term or Short Term
Bank Overdraft and Cash Credit (Increase)
Repayment of Bank Overdraft and Cash Credit
paid
Interim Dividend paid on Equity Shares/ Proposed Dividend
Final Dividend paid on Shares (Less Unclaimed dividend)
Credit
Interest paid on Debentures/ Loans/ Bank Overdraft/ Cash
Dividend Tax paid (On dividend)
Additional capital introduced
Drawings

NET CASH FLOW FROM (USED IN) FINANCING ACTIVITES

(D)NET INCREASE OR DECREASE IN CASH ANDCASH EQUIVALENTS DURING THE YEAR(A+B+C)

INVESTMENT
(E) CASH AND CASH EQUIVALENTS AT THE BEGINNING (OPENING CASH +BANK + CURRENT
MARKETABLE SECURITIES)
INVESTMENT
(E) CASH AND CASH EQUIVALENTS AT THE END (CLOSING CASH +BANK + CURRENT
MARKETABLE SECURITIES) (D+E)
 Working Notes:
and extraord1naryItems
1 Calculation of Net profit before tax protit)
balance of profit -opening balance of
(Closing
Net Profit during the year
previous year
(+) Proposed dividend paid related to
(Current year)
(+) Interim dividend paiddurng the year
othe reserve
(+) Transfer to General Reserve Or any
(+) Provision for tax made during the year earthquake)
to Statement of Profit and Loss (Loss due to fire,
(+) Extraordinary itens
debited claim received)
Stateent of Profit and Loss (Lottery income, insurance
credited to
(--) Extraordinary items of Profit and Loss
ctedited to Statement
(--) Refund of income tax
Decrease
Increase
EQUITY AND LIABILITIES:
1 Shareholder's Fund FA
FA+
(A) Share Capital (Equity and Preference)
(B) Reserve and Surplus Utilised OR OA-
OA+
() General Reserve/ Other Reserves profit
Closing bal. of profit -Opening bal. of
(ii) Statement of profit and Loss Used to written off
FA+
(iii) Securities premium Reserve Loss on sale of
Gain on sale of
(iv) Capital Reserve
assets
Assets

2 Non-Current Liabilities
(A) Long Term Borrowings
(Debentures, Bank Loans, Others long term loans) FA+ FA

Long Term Provision OA+ OA

(B)

3 Current Liabilities

(A) Short Term Borrowings

(Bank overdraft, Cash Credit, Short Term loans) FA+ FA

(B) Trade Payable OA+ OA

(C) Other Current Liabilities OA+ OA
Short Term Provision
(D)
()Provision for Taxation PY paid=OA- CY made-0A+
(i)Provision for Doubtful Debts OA+ OA-
ASSETS:
1 Non -Current Assets

(A) Property, Plant and Equipment and Intangible Assets

(0) Property, Plant andEquipment (Tangible)
(Building, Machinery, Furniture etc.) Depreciation (0A+)
OR Sale (|A+)
(i)lntang1ble Assets
(Goodwill, Trademark, Patent Right) IA- OA+ Amortized
OR Sale (|A+)

3
 IA+
IA- IA+
(B) Non-Current Investment IA-
(C) Long Term Loans and Advances
OA+ Written off
(D) Other Non-Current Assets FA-
Underwriting Commission)
(Share issue Expenses,

Equivalents
2. Current Assets
Cash and Cash
(A) Current Investment (Marketable Securities) IA-
IA+
Investment in Others Firm/company
OA+
OA-
(B) Inventories OA+
Trade Receivable OA-
(C)
Cash and Cash Equivalents
(D) Cash and Cash Equivalents IA+
Short Term Loans and Advances IA-
(E) OA+
Other Current Assets OA-
(F)

Adjustment related to Cash flow statement:

1 Extraordinary ltems
CFFOA -- CFFOA +
(1). Extraordinary items of incomes credited to statement of P/L
(i) Lottery income
(ii) Compensation received/ Claim from Insurance Company on account of loss of
Inventory due to fire, earthquake, floods CFFOA -- CFFOA +

(ii) Bad debts recovered CEFOA -- CFFOA+

(iv) Compensation received/ Claim from Insurance Company on account of loss of
assets due to fire, earthquake, floods CFFOA -- CEFIA +

(v) Compensation received against compulsory acquisition of land CEFOA -- CFFIA +

(2). Extraordinary items of expenses debited to statement of P/L CFFOA + CFFOA

(Loss of goods due to earthquake, fire &floods, Compensation paid to employees
Taking VRS)

2. Interest
Interest paid on borrowings/ Debentures/ Loans long term or short term/ CFFFA
CFFOA +
(1)
Interest on bank overdraft/ cash credit
Loans and advance CEFOA
Interest received on investment/ Interest received on
CFFIA+
(2).

3. Dividend
CEFOA+ CEFFA
(1) Dividend paid on Share capital (Equity/Preference)
CFFOA- CEFIA+
(2). Dividend received on shares held as investment
 CEFOA
4. CFFOA+
Income Tax CFFIA
(1) CFFOA+
Tax paid (It means income tax on business income) CEFFA
(2) Capital Gain tax paid on profit on sale of assets CEFOA+

(3) Dividend tax paid by company on dividend paid CEFOA+

CEFOA-

(4). Refund of Tax

CFFIA+
5 Rent Received CFFOA-
CEFIA+
(1). Rent received on building heldas investment CFFOA-
(2) Amount received bygiving intangible assets on rent

Some other important points of adjustments:

1. Provision for taxation

means notes to accounts
Case: 1 When given only in Balance Sheet
Balance Sheet
Note no.
31/03/2023(CY ) 31/03/2022(PY)
EQUITY AND LIABILITIES
Current Liabilities
Short Term Provision 1 42,000 28,000

Notes to Accounts:

1. Short Term Provision

Provision for Taxation 42,000 28,000

Solution:
PY paid 28,000 CEFOA- (In End)
CY made/provided 42,000 CEFOA+ (In Beginning)

Case 2: When given only in adjustments;

Income tax paid during the year Rs. 30,000
Solution:
It means paid = made/provided
30,000 CFFOA- (In End)
30,000CFFOA+ (In Beginning)

S
 adjustment both 31/03/2023(CY) B1/03/2022(PY)
Sheet and Balance Sheet
Case 3;When given in Balance
Note n0.

EQUITY ANDLIABILITIES 53,000

65,000
Current Liabilities
Short Term Provision

Notes to Accounts: 53,000

65,000
Short Term Provision
1
Provision for Taxation

Adjustment:
year Rs. 47,000
1 Tax paid duringthe
Solution:
Taxation Account
Prepare Provision for Provision for Taxation
ACcount
Amount
Particulars
Amount 53,000
(Opening balance)
Particulars
By Balance b/d
To Bank A/c(Paid) 47,000
Statement of P/L (Balancing Figure)) 59,000
65,000 By
To Balance c/d (closing balance) (Made/provided)
1,12,000
1,12,000
GIVEN
47,000 CFFOA- (In End) BALANCING FIGURE
Paid
made/provided 59,000 CFFOA+ (InBeginning)

Balance Sheet
EXAMPLE:
Note no.
31/03/2023(CY ) B1/03/2022(PY)
EQUITY AND LIABILITIES
Current Liabilities
1 36,000 47,000
Short Term Provision
Notes to Accounts:

1
Short Term Provision
Provision for Taxation 36,000 47,000

Adjustment:
1. Provision for tax made(provided) during the year Rs. 41,000
Solution:
Prepare Provision for Taxation Account
Provision for Taxation Account
Particulars Amount
Particulars Amount
ByBalance b/d (Opening balance) 47,000
To Bank A/c (Balancing figure, paid) 52,000
To Balance c/d (closing balance) 36,000 By Statement of P/L (Made) 41,000

88,000 88,000

52,000 CEFOA BALANCING FIGURE

Paid (In End)
made/provided 41,000 CFFOA+ (In Beginning) GIVEN

6
 Treatment NEW 2.
3. Dividend
Interim
paid (i) (i) CFS in
Case2: eContingencies o
CONCEPT
S Proposed
Dividend
TreatmentCFS in ToParticulars
To To DEPRECIATION Case ProposedProposed proposed
To ToParticulars To provision maintained WhentreatmentNote: (v) (iv) (i) (ii) (i)
Bank Gain Balance dpproved
Bank Gain Balance rh 1: OF
Depreciation But Machinery
Sale of on It
When
on It Gain Machinery
DepreciationPurchases
Current
Loss Year of A/c dividend dividend PROPOSED
A/c for cace
means of if sale b/d means by
sale
b/d(Opening and gain gain on on (Purchases during bythe and
(Purchases depreciation on (Opening of Depreciation ON the
of balance Sale sale balance event
the
balance transferis machinery for forshareholderdirector
machinery charged required. FIXED the
date of of current previouIS DIVIDEND
occurring
Machinery
Machinery of of year
of Balance of of to
Balance) TANGIBLE is
account of
provision machinery)) Machinery charged treated
machinery) Machinery
sale to Capital A/c (Current year
A/C AS year in
proviSIon after
) of it AGM
of Reserveis to
ASSETS as
machinery for not Year) the
machinery A/c OA+ OA + Amount A/c
machinery held
Contineent
IAmount + IA IA Machinery
Machinery depreciation tor credited OA Balance
show show in
depreciation and (PLANT
the
total written
account. original capital
to A/c account AND liabilities
next Sheet
A/c
accumulated is statement
given reserve By ByParticularsBy By (At down Cash Add effectNo Cash Add vear dates.
(accumulated
By By ByParticulars By (At cost. account Written MACHINERY,
(Provision and
Loss Bank
BalanceDepreciation in
Balance Loss BankProvision Original used used Net in wil
in value. Net
increased ot onA/c benot
onA/c question) profit in in
profit
depreciation Provision ( down accounted
provided
c/d sale (Sale cost) c/d sale (Sale for financing profit financing
for BUILDING)
(Closingdepreciation
of and (Closing of A/c value)
of depreciation Before Before
Depreciation with machinery
machinery of
for loss, machinery) (CY in in
machinery) gain activities activities Tax
on Balance)Depreciation) Tax the tne
Balance) depreciation hence
machinery (OA+) (OA+) booKS.boORS.
on amount A/c account
A/c A/c (FA--) (FA--)
machinery not
deducted. then is
sold, account Amount not
no
sold) transfer maintained)
further
is
Amount from
 Account)
Depreciation Amount
(Accumuated
Depreciation Account
Particulars balance)
Provision for Amount b/d
(Opening
Depreciation)
Particulars
ByBalance A/c (CY
Depreciation
On mach. Sold) By statement ofP/L)
To Machinery A/c (acc. Dep. (Transferto
To Balance c/d (closing balance)

Treatment in CFS
Sale of Machinery IA +
(i)
Purchases of Machinery IA -
(i)
Current Year Depreciation OA+
(ii)
OA+
(iv) Loss on sale of Machinery
further
(v)
Gain on Sale of Machinery OA
reserve increased with gain amount then no
Capital Reserve andcapital not deducted.
NOte: But it gain transfer to credited to statement of profit and loss, hence
is not
treatment ofgain is required. As it
machinery sold will not be recorded in CFS.
(i) Accumulated Depreciation on

Non-Current Investment Account

4.
Investment A/c Amount
Amount Particulars
Particulars
ToBalance b/d (0pening Balance)
By Bank A/c (Sale of Investment)
To Gain on sale of investment A/c
By Loss on sale of investment A/c
ToBank A/c (Purchases of Investment)
By Balance c/d (Closing Balance)

Treatment in CFS
Sale of Investment IA +
(1)
Purchases of Investment IA
(i) OA +
(i) Loss on sale of Investment
Gain on Sale of Investment OA
(v) capital reserve increased with gain amount then no
further
Note: But if gain transfer toCapital Reserve and
statement of profit and loss, hence not deducted.
treatment of gain is required. As it is not credited to
 nterest paid on Borrowing/Debentures /iloane long term or Short te 31/03/2017
31/03/2018
12% Debentures 3,00,000
5,00,000
Cases
Interest on 5,00,000
() Vwhen Debentures have been issued on 01/04A/2017 (beginning of yed) Interest on 3,00,000
(ii) When Debentures have been issued on 31/03/2018 (end of year)
(üi) When Debentures have been issued on 01/10/2017 (middle of year)
Interest on 3,00,000 6 Months
Interest on 5,00,000 6 Months
(iv) When Debentures have been issued on 01/07/2017
Interest on 3,00,000 3 Months
Interest on 5,00,000 9 Months
(v) When Debentures have been issued on 01/01/2018
Interest on 3,00,000 9 Months
Interest on 5,00,000 3 Months

Redemption of Debentures/ Repayment of Loans

31/03/2018 31/03/2017
12% Debentures 4,00,000 7,00,000
Cases

() When Debentures have been redeemedon 01/04/2017 (beginning of year) Interest on 4,00,000
(ii) When Debentures have been redeemed on 31/03/2018 (end of year) Interest on 7,00,000
(ii) When Debentures have been redeemed on 01/10/2017 (middle of year)
Interest on 7,00,000 6 Months
Interest on 4,00,000 6 Months
(iv) When Debentures have been redeemed on 01/07/2017
Interest on 7,00,000 3 Months
Interest on4,00,000 9 Months
(v) When Debentures have been redeemed on 01/01/2018
Interest on 7,00,000 9 Months
Interest on 4,00,000 3 Months

NOTE: Similarly dividendof Preference Share Capital paid.

6. Interest on Investment received/ Interest on loans and Advances given
31/03/2018 31/03/2017
10% Investment 12,00,000 8,00,000
Cases
(i) When Investment have been purchased on 01/04/2017 (beginning of year) Interest on 12,00,000
() When Investment have been purchased on 31/03/2018 (end of vear) Interest on 8,00,000
(i) When Investment have been purchased on 01/10/2017 (middle of year)
Interest on 8,00,000 6 Months
Interest on 12,00,000 6 Months

(iv) When Investment have been purchased on 01/07/2017

Interest on 8,00,000 3 Months
Interest on 12,00,000 9 Months
 5,00,000
onInterest
7,00,000
on
Interest
31/03/2017
7,00,000 Statements
Flow
year)
year) Cash
of year)
(beginning in
01/01/2018 of
of (middle
(end
recorded Premium
31/03/2018 Debentures
9 Months
Months 5,00,000 Months
6 6Months
01/1O/2017
31/03/2018
01/04/2017 Months
3 Months Months
9 Months
9 01/01/2018
01/07/2017 not Securities
included,
purchased3
on 3 or
Shares
Shares
on on on on on of
soldsoldsold sold sold not out
is issuing
intoissued
been beenbeenbeen been been cash
Debentures
have havehavehave have have whichby shares
12,00,000
Interest
on 5,00,000
on
Interest7,00,000
Interest7,00,000
5,00,000
on on
Interest on 5,00,000
Interest
on
Interest Assets
8,00,000
on
Interest 7,00,000
on
Interest
Investment
When Investment
InvestmentInvestmentInvestment
Investment in
Transactions
Non-Cash bonus
transactions
of of
Conversion
Acquisition
Sale
Investment
of paid
10%
InvestmentWhen
WhenWhen When When Fully
Non-cash
Cases
(v) (ii) (iv) (v) (i) (iü) (ii)
) ii)
7.
and a
period during
cash accounting
of
and
(Uses) accounting perioa.
cash
Statements
Activities
accounting
used
Separately
Outflows an
Investing an
during have
during Flow
and
equivalents
an that
Activities.
activities
Activities,
(Sources) equivalents during
Activities.
and Cash
cash
equivalents of
Financing Importance/BenefitspaymentsEarningvarious
cash provided business
Operating Financing
inflowS cash decision Accounting
and
and Planning Cash from from Statement
and cash cash been of
shows
from and Activities and Cash Flow Decision managerial Liquidity
cash of
andhave Budget of
Transaction
StatementsDressing
period Statements
which
Activities
outflowscash
(Application) of Cash
Financial Budgetreceipts Concept
Income
of that
Investing Significance/
/
Advantages/Uses deviation
the
inflows
(Sources)
in activities Cash the Dividend
accounting
statement different
Investingchanges Term Cash Cash ascertaining judging
Window of
Accrual
Preparing Flow Non-Cash Substitute
Historical
in
Nature
flow Activities, the
Short with of know making for
major Trend take Cash
a an Cash Activities, net of the
Statement
is
Comparison suitable
Possibility
during particular for for
the theperiod. to to in to ignores
ignores a
the ascertain
theOperating of Helpful
Helpful of not
of
Activities.
Financing Ascertain
highlight UsefulUseful Study HelpfulHelpful Limitations
ascertain
Objectives Not is
equivalents
cash
Meaning, Operating It It
trom (vii)
() () (i) (iv) (V) (vi)
Flow
To To lo lo (ii) (ii) (iv) (v) (vi) (vii)
Cash
(i) (i1) (ii)(iv) 4.
1. 2. 3
 equivalents marketable Cash
Activities
amountValues.
of
Marketable Activities
-------Operating
rent on
marketable
Effect
cash Flow Operating and
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computer
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in and transactions)
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bank) changes or amount--- received of
premium
into Investment cash Activities
Investing purchases
Converted Companiesloans----
Activities
by and and
demand of
of Outflow
Cash (Non-cash
Manufacturing premium
land
amount Inflow
Cash Sale Activities Taking SeCurities
risk same Operating sale and
Term paid of of
readilyinsianificant
on(Repayable with
bank, Banking purchased
purchases
(Short
in Interest
paid-----Financing
and and
values. decrease Flow decreased or
Securities
and
from Company/ are
are
Investment Company/Giving paid Reserve
thattheir
NO withdrawn Received-
Activities and Activities
and hand Dividend claims
Activities andand
paid----Financing
or and
deposit investment
bank
with in less)
Increase----
increase Decrease and
Received
Companies/Trading salesale General
changes in Equivalents-- Companies/Investment
Securities
Drafts increased Dividend companies
generating on
Marketable
Activities.
or Papers Current Amountof business
business
months arise? types Dividend of
liquid
of
OR either Dividend out
risk CommercialEquivalents
+ hand bank, and of insurance
estate Operating
highly(Three
term
bank cash
is EquivalentsCash Equivalents Various Purchases
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Demand insignificant transaction Received Received, Interest
received
at
in of and into and
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Cash flow Non-Financial
into paid
real shares
and Cash deposited (For of
and
short
are
These the Cash
Cash
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maturity
present Bills hand+ any Interest
Interest Interest Bonus
Sale:Conclusion
Cash
in
hand and Flow
+ does on are
Treasury Securities) of and securities)
(ii)Cash Effect and(Amount
()Cash in Results
Terms Short
which Cash When Cash Cash (ii) (iv)
No () (i)