CBSE Class 12 Accountancy sample paper 2023-24: question 34
From the official CBSE sample question paper for 2023-24, section B-I, question 34, for 6 marks. Try it first; the hints and our step-by-step solution are below.
Q34 · 6 marks · Long answerCash Flow Statement
Prepare a Cash Flow Statement from the following Balance Sheets of Arya Ltd.:
| Particulars | Note | 31.3.2023(₹) | 31.3.2022(₹) |
|---|---|---|---|
| I. Equity and Liabilities: | |||
| (1) Shareholders' Funds: a) Share Capital | 1 | 10,00,000 | 8,00,000 |
| b) Reserves and Surplus | 2 | 6,40,000 | 5,40,000 |
| (2) Non-Current Liabilities: Long-term Borrowings | 1,50,000 | 1,00,000 | |
| (3) Current Liabilities: a) Trade Payables | 3 | 30,000 | 12,000 |
| b) Short-term Provisions | 30,000 | 28,000 | |
| Total | 18,50,000 | 14,80,000 | |
| II. Assets: (1) Non-Current Assets: a) Property, Plant and equipment and intangible assets: Property, Plant and Equipment | 4 | 7,75,000 | 4,90,000 |
| b) Non-current Investments | 90,000 | 50,000 | |
| (2) Current Assets: a) Inventory | 6,20,000 | 4,13,000 | |
| b) Trade receivables | 3,20,000 | 4,94,000 | |
| c) Cash & Cash Equivalents | 45,000 | 33,000 | |
| Total | 18,50,000 | 14,80,000 |
Notes to Accounts:
| Particulars | 31.3.2023 | 31.3.2022 |
|---|---|---|
| 1. Reserves & Surplus: General Reserve | 5,00,000 | 4,30,000 |
| Capital Reserve | 60,000 | 50,000 |
| Surplus i.e. balance in statement of profit and loss | 80,000 | 60,000 |
| 6,40,000 | 5,40,000 | |
| 2. Long-term Borrowings: 10% Debentures | 1,50,000 | 1,00,000 |
| 3. Short-term Provisions: Provision for tax | 30,000 | 28,000 |
| 4. Tangible Assets: Plant and Machinery | 7,75,000 | 4,90,000 |
Additional Information:
1. Tax provided during the year is ₹17,000.
2. Depreciation charged on plant and Machinery during the year amounted to ₹1,20,000.
3. Non-current Investments costing ₹30,000 were sold for ₹40,000 during the year. Gain on sale of Investments was credited to Capital Reserve.
4. Additional Debentures were issued on 31.03.2023.
Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.
Hints
Open one hint at a time and try again before the next.
Hint 1
Rebuild profit before tax from the surplus, reserve transfer and tax provided.
Hint 2
Gain on sale of investments went to Capital Reserve, not to profit.
Hint 3
Use ledger accounts for plant, investments and provision for tax to find the hidden figures.
Step-by-step solution
Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.
- 1 mark
Net profit before tax. Increase in surplus ₹ 20,000 + transfer to general reserve ₹ 70,000 + tax provided ₹ 17,000 = ₹ 1,07,000. The ₹ 10,000 gain on sale of investments went straight to Capital Reserve, so it is not in this profit.
- 2 marks
A. Operating activities
Particulars ₹ Net profit before tax 1,07,000 Add: Depreciation 1,20,000 Add: Interest on debentures (10% of 1,00,000) 10,000 Operating profit before working capital changes 2,37,000 Add: Increase in trade payables 18,000 Add: Decrease in trade receivables 1,74,000 Less: Increase in inventory (2,07,000) Cash generated from operations 2,22,000 Less: Tax paid (28,000 + 17,000 − 30,000) (15,000) Cash flow from operating activities 2,07,000 - 1½ marks
B. Investing activities. Plant purchased = 7,75,000 + 1,20,000 − 4,90,000 = ₹ 4,05,000. Investments purchased = 90,000 − (50,000 − 30,000) = ₹ 70,000. Sale of investments ₹ 40,000. Net cash used = (₹ 4,35,000).
- 1 mark
C. Financing activities. Shares issued ₹ 2,00,000 + debentures issued ₹ 50,000 − interest paid ₹ 10,000 (new debentures issued on 31st March earn none this year) = ₹ 2,40,000.
- ½ mark
Net increase = 2,07,000 − 4,35,000 + 2,40,000 = ₹ 12,000; opening cash ₹ 33,000 + ₹ 12,000 = closing cash ₹ 45,000.
Answer: Operating ₹ 2,07,000; investing (₹ 4,35,000); financing ₹ 2,40,000; net increase ₹ 12,000 (₹ 33,000 to ₹ 45,000)
Where the marks are
- Net profit before tax ₹ 1,07,000 (1 mark)
- Cash from operating activities ₹ 2,07,000 (2 marks)
- Investing activities (₹ 4,35,000) (1½ marks)
- Financing activities ₹ 2,40,000 (1 mark)
- Reconciliation of cash (½ mark)
Revise the chapter
- Chapter: Cash Flow Statement (notes, formulas, where marks are lost and every past question)
- Topic: Cash Flow from Operating Activities (Indirect Method)
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