PRACTICE PAPER Q1.

State which of the following will result in inflow/outflow of cash : Purchase of stock for cash Purchase of Fixed asset on long term deferred payment basis Sale of stock at profit Sale of fixed asset at loss of 3000 (BV 5000) BR endorsed to creditors BR endorsed to creditors, Dishonoured Issue of shares against purchase of fixed asset Cash deposited into bank Cash withdrawal from bank Declaration of final dividend Issue of fully paid bonus share Purchase of marketable securities for cash Writing off Bad off against provision for doubtful debts Q2.Classify the following as 1. Operating activities 2.Investing activities 3.Financing activities 4. Cash or cash equivalents Purchase of Machinery Proceeds from issue of equity shares Cash Sales Proceeds from long term borrowing Selling & distributions expenses Income tax paid Dividend paid on preference shares Rent paid Trading commission received Underwriting commission paid Salaries paid Proceeds from sale of patents Interest paid on LT Borrowings Office & admn expenses Discount recd from supplier Refund of income tax Brokerage paid on issue of shares Brokerage paid on purchase of investments Dividend recd on shares held as investment Purchase of Goodwill Bank overdraft Cash credit Short term deposit Marketable securities Q3. Classify the foll. as 1. Operating activities 2.Investing activities 3.Financing activities in case the (a) Manufacturing enterprise ( b) Financial enterprise Purchase of investments Proceeds from sale of investments

Brokerage paid on purchase & sale of investments Interest received on debentures held as investments Dividend received on shares held as investments Loans & advances to third parties Receipts from the repayments of loans & advances made to third parties Receipts of interest on loans & advances made to third parties. CASH FLOW STATEMENT

A. CASH FLOW FROM OPERATING ACTIVITIES

NET INCOME BEFORE TAX ADD: Depreciation Provision for Bad, Doubtful Debts Interest Expenses (Net) Transfer to Capital reserve/ Reval. Reserve (Profit)/Loss on Fixed Assets Sold (Profit)/Loss on Sale of Investments Dividend Income EXCEPTIONAL ITEMS Decrease/(Increase) in Trade and Other Receivables Decrease/(Increase) in Inventories Increase/(Decrease) in Trade and Other Payables

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES

CASH GENERATED FROM OPERATIONS Income Taxes Paid (Net of Refund) NET CASH FROM OPERATING ACTIVITIES

B. CASH FLOW FROM INVESTING ACTIVITIES

Proceeds from Sale of Fixed Assets Purchase of Fixed Assets Proceeds from Sale of Sister Unit (Increase)/Decrease in Corporate Deposits Interest Received Capital Subsidy Received Dividend Received Sale/Redemption (Purchase) of current Investments Sale of Investment in Subsidiaries Investment in Subsidiaries Sale of investments Purchase of Investments

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of Share Capital Proceeds from issue of Share Warrants Share Premium Received Proceeds from Borrowings Repayment of Borrowings Dividends Paid Interest and Finance Charges Paid

NET CASH (USED IN)/FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND EQUIVALENTS CASH AND CASH EQUIVALENTS (OPENING BALANCE)

CASH AND CASH EQUIVALENTS (CLOSING BALANCE)

Q4. The following are transactions of RanchorrDas Pvt. Ltd. : On March 1, RanchorrDas & others invest Rs 50,000 in cash in RPL
On March 2nd, RanchorrDas took a loan of Rs 20,000 from Chatur for RPL. Being a friend Chatur does not ask any INTEREST on the loan given & asks it to be repaid 6 months later.

use. At the end of the month MARCH, prepare a Cash Flow statement.

On March,3rd RPL purchased 2 computers for Cash each costing Rs 29,000 On March 4th, RPL purchased supplies especially stationary for Rs 6000 on credit On March 19th, RPL completes its SALE of software to a retail store & receives a price of Rs 12,000. On March, 21st, RPL pays Rs 2000 to its creditors for supplies On March, 29th , RPL pays salaries to its employees amounting to Rs 4000 & as office rent Rs 1200. On March, 30th , RPL delivers a software for shoe shop. The customer agrees to pay the price of Rs 8000 a week later. On March, 31st , RanchorrDas withdraws Rs 3500 for his personal

Q5. Below is the P & L Account of Kanishk Enterprise which is a manufacturer & trader in oil. Determine the CASH INFLOWS (NET) from the various activities for his business for the year ending 2005. Profit & Loss Account as on 31.03.05 80,00 To Purchases (cash ) 0 By Sales 20,00 To Direct Exp 0 65,00 To Gross Profit 0 165,0 TOTAL 00 TOTAL

165,0 00

165,0 00 65,00 0 13,00 0

Rent Salaries Depreciation Provision for Bad Debts Proposed Dividends Provision for Tax Preliminary exp written off NET PROFIT TOTAL

8,000 20,00 0 15,00 0 5,000 10,00 0 2,500 1,500 16,00 0 78,00

By Gross Profit Profit on sale of Machine

TOTAL

78,00

Q6. Prepare Cash flow statement :

M/s Abdul Nayeem & co. 2004 2005 LIABILITIES 400,0 500,00 00 0 Equity Share Capital 200,0 Preference Share 00 nil capital 150,0 300,00 00 0 Debentures 41,00 200,00 Long Term 0 0 borrowing Net Profit Reserves & surplus 791,0 00 1,000,0 00

ASSETS Fixed Assets (land) Investments Machinery Cash in Hand

2004 250,0 00 50,00 0 100,0 00 nil 100,0 00 291,0 00 791,0 00

2005 500,000 20,000 40,000 30,000 119,000 291,000 1,000,0 00

TOTAL

TOTAL

Profit & Loss Account as on 31.03.05 15,00 To Purchases (cash ) 0 By Sales Salaries Income Tax Debenture Interst Dividends paid (Pref. Share) Dividends paid (Equity ) NET PROFIT TOTAL 5,000 1,000 6,000 3,000 6,000 19,00 0 55,00 0 Interst Recd Dividend Income

30,00 0 10,00 0 15,00 0

TOTAL

55,00 0

Q7.
Profit & Loss Account as on 31.03.07 20,0 To Purchases (cash ) 00 By Sales 5,00 To Wages 0 5,00 To Gross Profit 0 30,0 TOTAL 00 TOTAL 1,00 0 1,00 0 30,00 0

30,0 00

Rent Salaries

By Gross Profit By Profit on sale of Building

5,000 5,000

Depreciation Loss on sale of furniture Goodwill written off NET PROFIT TOTAL

1,00 0 500 1,00 0 5,50 0 10,0 00

Book Value : 10,000 Sold for : 15,000

TOTAL

10,0 00

Calculate cash from operations. ADJUSTMENTS FOR CURRENT ASSETS & CURRENT LIABILITES :1. CASH FROM OPERATIONS = NET PROFIT + DEBTORS

OUTSTANDING O/P BAL. OR DEBTORS OUTSTANDING C/S BALANCE (AT THE END OF YEAR)
2. CASH FROM OPERATIONS = NET PROFIT + DECREASE IN

DEBTORS OR - INCREASE IN DEBTORS

Q8. From the foll balances calculate cash from operations:Particulars Debtors Bills receivable Creditors Bills payables Outstanding expenses Prepaid expenses Accrued income Income received in advance profit made during the year Profit made in year 31.03.04 50000 10000 20000 8000 1000 800 600 300 -31.03.05 47000 12500 25000 6000 1200 700 750 250 130000

Q9. Balance sheet & Income exp Statement as follows from which prepare Cash Flow Statement. Also for your info. during 2004 company pays cash dividends of Rs 36,000. Abc Ltd Balance Sheet

Particulars ASSETS Cash Accounts Receivable Prepaid expenses Long Term investments Land Building Accum. Depreciation - Buildg Equipments Accum. Depreciation Equip. TOTAL LIABILTIES Accounts Payable Bonds payable Equity Retained Earnings TOTAL

2004 74000 52000 12000 1000 140,000 400,000 (22,000) 136,000 (20,000) 7,73,000 81,000 3,00,000 1,20,000 2,72,000 7,73,000

2003 98000 72000 0 2000 0 0 0 0 0 172,000 12000 0 1,20,000 40,000 172,000

Abc Ltd - Income Exp Statement as ended for Dec, 31 2004

Particulars Sales Operating Expenses (excl Dep) Depreciation PBT Taxes Net Income

9,84,000 5,38,000 42,000 580,000 4,04,000 1,36,000 2,68,000

Q10.