Skip to content

Extracts of the… (Class 12 Accountancy SQP 2025-26, Q34)

questionbuddy.in/q/cbse-12-accountancy-2025-26-sqp-q34-extracts-balance-sheets-agrawal-ltd

AccountancyCBSE Class 12 · Sample paper, session 2025-26 · 6 marks · Long answer

CBSE Class 12 Accountancy sample paper 2025-26: question 34

From the official CBSE sample question paper for 2025-26, 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

Extracts of the Balance Sheets of M/s Agrawal Ltd. as on 31st March,2024 and 31st March 2025 along with additional information are given below. You are required to calculate:
(i) Operating profit before changes in working capital.
(ii) Cash Flows from Financing Activities.

31.03.202531.03.2024
Equity Share Capital12,00,0009,00,000
10% Preference Share Capital4,00,0005,00,000
Cash Credit2,50,0001,00,000
Profit and Loss (Cr.)8,00,0006,00,000
12% Debentures4,00,0003,00,000
Bank overdraft1,00,00075,000
Outstanding Interest on Debentures3,000--------

Additional Information:
a) New equity shares and debentures were issued on last day the current accounting year ended 31st March, 2025. Debentures were issued at a discount of 5% which was written off at the end of the year.
b) Dividend on preference shares and interim dividend @ 15% were paid on equity shares on 31st March, 2025
c) Preference Shares were redeemed on 1st April, 2025 at a premium of 5%. The premium was provided out of profits.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2025-26.

Hints

Open one hint at a time and try again before the next.

Hint 1

Rebuild net profit by adding back the dividends paid out of the year's profit.

Hint 2

Interest and discount on debentures are non-operating items to add back.

Hint 3

Bank overdraft and cash credit go under financing activities in the CBSE syllabus; interest paid excludes the outstanding ₹ 3,000.

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. Net profit before tax. Increase in surplus = 8,00,000 − 6,00,000 = ₹ 2,00,000. Add back appropriations: preference dividend 10% on ₹ 4,00,000 = ₹ 40,000 (₹ 1,00,000 was redeemed at the start of the year) and interim equity dividend 15% on ₹ 9,00,000 = ₹ 1,35,000 (new shares came on the last day). Net profit before tax = ₹ 3,75,000.

    1 mark

  2. Operating profit before working capital changes

    Particulars₹
    Net profit before tax3,75,000
    Add: Premium on redemption of preference shares provided out of profits (5% of 1,00,000)5,000
    Add: Interest on debentures (12% of 3,00,000)36,000
    Add: Discount on issue of debentures written off (5% of 1,00,000)5,000
    Operating profit before working capital changes4,21,000
    2 marks

  3. Cash flows from financing activities

    Particulars₹
    Proceeds from issue of equity shares3,00,000
    Redemption of preference shares (1,00,000 + 5,000)(1,05,000)
    Proceeds from issue of debentures (1,00,000 − 5,000)95,000
    Increase in bank overdraft25,000
    Increase in cash credit1,50,000
    Dividend paid on preference shares(40,000)
    Interim dividend paid on equity shares(1,35,000)
    Interest paid on debentures (36,000 − 3,000 outstanding)(33,000)
    Net cash from financing activities2,57,000
    3 marks

Answer: (i) Operating profit before working capital changes ₹ 4,21,000 (ii) Net cash from financing activities ₹ 2,57,000

Where the marks are

  • Net profit before tax ₹ 3,75,000 (1 mark)
  • Operating profit ₹ 4,21,000 (2 marks)
  • Financing activities ₹ 2,57,000 (3 marks)

Revise the chapter

Practise this chapterBoard-style questions from Cash Flow Statement, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2025-26: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.