CBSE Class 12 Accountancy sample paper 2026-27: question 34
From the official CBSE sample question paper for 2026-27, 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
From the following Balance Sheet of Krishang Ltd. as at 31 March 2026, calculate Cash Flow from Operating Activities and Investing Activities.
Balance Sheet of Krishang Ltd. as at 31 March 2026
| Particulars | Note No. | 31-03-2026 (₹) | 31-03-2025 (₹) |
|---|---|---|---|
| I. Equity and Liabilities | |||
| 1. Shareholders' Funds | |||
| (a) Share Capital | 6,00,000 | 5,50,000 | |
| (b) Reserves and Surplus | 1 | 1,50,000 | 1,00,000 |
| 2. Non- Current Liabilities | |||
| (a) Long term Borrowings | 2 | 1,20,000 | 85,000 |
| 3. Current Liabilities | |||
| (a) Trade Payables | 89,500 | 1,02,000 | |
| (b) Short - term Provisions | 3 | 25,000 | 38,500 |
| Total | 9,84,500 | 8,75,500 | |
| II. Assets | |||
| 1. Non- Current Assets | |||
| (a) Fixed Assets/Property Plant and Equipment and Intangible Assets | |||
| (i) Tangible Assets/Property, Plant and Equipment | 4 | 5,35,000 | 4,25,000 |
| (ii) Intangible Assets | 5 | 20,000 | 56,000 |
| 2. Current Assets | |||
| (a) Current Investments | 1,20,000 | 75,000 | |
| (b) Trade Receivables | 1,52,500 | 1,32,000 | |
| (c) Cash and Cash Equivalents | 1,57,000 | 1,87,500 | |
| Total | 9,84,500 | 8,75,500 |
Notes to Accounts:
| Note No. | Particulars | 31-03-2026 (₹) | 31-03-2025 (₹) |
|---|---|---|---|
| 1 | Reserves and Surplus: Surplus i.e. Balance in Statement of Profit and Loss | 1,50,000 | 1,00,000 |
| 2 | Long-term Borrowings: 10% Debentures | 1,20,000 | 85,000 |
| 3 | Short - term Provisions: Provision for Tax | 25,000 | 38,500 |
| 4 | Tangible Assets/Property, Plant and Equipment: Machinery | 6,35,000 | 5,00,000 |
| Less: Accumulated Depreciation | (1,00,000) | (75,000) | |
| 5,35,000 | 4,25,000 | ||
| 5 | Intangible Assets: Goodwill | 20,000 | 56,000 |
Additional Information:
i. A piece of machinery costing 12,000 on which accumulated depreciation was 8,000 was sold for 3,000.
ii. 10% Debentures were issued on 1st October 2025.
iii. On 1st May, 2025, Land was purchased of ₹ 2,00,000 for investment purpose but due to financial requirements the company had to sell it on 31st January 2026 for ₹ 2,20,000.
Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2026-27.
Hints
Open one hint at a time and try again before the next.
Hint 1
Add back the tax provided to the change in surplus.
Hint 2
Interest on new debentures runs only from 1st October.
Hint 3
Current investments are marketable securities unless stated otherwise.
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 ₹ 50,000 + provision for tax ₹ 25,000 = ₹ 75,000. Depreciation: accumulated depreciation 75,000 − 8,000 + charge = 1,00,000, so charge = ₹ 33,000. Loss on machine sold = (12,000 − 8,000) − 3,000 = ₹ 1,000. Interest on debentures = 10% × 85,000 + 10% × 35,000 × 6/12 = ₹ 10,250. Gain on land = ₹ 20,000.
- 2½ marks
A. Operating activities
Particulars ₹ Net profit before tax 75,000 Add: Depreciation 33,000 Add: Goodwill written off 36,000 Add: Loss on sale of machinery 1,000 Add: Interest on debentures 10,250 Less: Gain on sale of land (20,000) Operating profit before working capital changes 1,35,250 Less: Increase in trade receivables (20,500) Less: Decrease in trade payables (12,500) Cash generated from operations 1,02,250 Less: Tax paid (38,500 + 25,000 − 25,000) (38,500) Net cash from operating activities 63,750 - 1 mark
Machinery A/c (working)
Particulars ₹ Particulars ₹ To Balance b/d 5,00,000 By Accumulated Depreciation A/c 8,000 To Bank A/c (purchase, balancing figure) 1,47,000 By Bank A/c (sale) 3,000 By Loss on Sale A/c 1,000 By Balance c/d 6,35,000 6,47,000 6,47,000 - 1½ marks
B. Investing activities: sale of machinery ₹ 3,000 − purchase of machinery ₹ 1,47,000 − purchase of land ₹ 2,00,000 + sale of land ₹ 2,20,000 = net cash used (₹ 1,24,000). Current investments are treated as marketable securities (cash equivalents), so they are not an investing flow.
Answer: Net cash from operating activities ₹ 63,750; net cash used in investing activities ₹ 1,24,000
Where the marks are
- Net profit before tax and non-cash items (1 mark)
- Cash from operating activities ₹ 63,750 (2½ marks)
- Machinery account (1 mark)
- Cash used in investing activities ₹ 1,24,000 (1½ marks)
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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