CBSE 2025, Compartment, Set 1

Question

Calculate Cash Flows from Operating and Investing Activities on the basis of the information given in the Balance Sheet of Pari Ltd. as at $31^{st}$ March, 2024.

| Particulars | Note No. | 31.03.2024 (₹) | 31.03.2023 (₹) |
|---|---|---|---|
| **I - Equity and Liabilities:** | | | |
| **1. Shareholders' Funds** | | | |
| (a) Share Capital | | 10,00,000 | 5,00,000 |
| (b) Reserves and Surplus | 1 | 5,00,000 | 3,00,000 |
| **2. Non-Current Liabilities** | | | |
| Long-term Borrowings (10% Debentures) | 2 | 4,00,000 | 4,00,000 |
| **3. Current Liabilities** | | | |
| (a) Short-term Borrowings (Bank OD) | 3 | 1,00,000 | 1,00,000 |
| (b) Short-term Provisions (Tax Prov) | 4 | 1,00,000 | 50,000 |
| **Total** | | **20,00,000** | **13,50,000** |
| **II - Assets:** | | | |
| **1. Non-Current Assets** | | | |
| (a) Property, Plant and Equipment | | 7,00,000 | 3,00,000 |
| (b) Non-Current Investments | | 4,00,000 | 1,00,000 |
| **2. Current Assets** | | | |
| (a) Inventories | | 2,00,000 | 2,50,000 |
| (b) Trade Receivables | | 3,00,000 | 4,00,000 |
| (c) Cash and Cash Equivalents | | 4,00,000 | 3,00,000 |
| **Total** | | **20,00,000** | **13,50,000** |

*Notes to Accounts:*
1. Reserves and Surplus: General Reserve (2.0L vs 1.5L); Surplus i.e. Balance in P&L (3.0L vs 1.5L).

Edvaya · Accepted Answer

The correct answer is Subjective. **1. Cash Flow from Operating Activities** | Particulars | Amount (₹) | Amount (₹) | |---|---|---| | Net Profit before Tax and Extraordinary Items (W.N. 1) | | 3,00,000 | | Add: Non-Cash & Non-Operating Items | | | | Interest on Debentures (10% of 4,00,000) | 40,000 | | | **Operating Profit before Working Capital Changes** | | **3,40,000** | | Add: Decrease in Current Assets | | | | Decrease in Trade Receivables (4L - 3L) | 1,00,000 | | | Decrease in Inventories (2.5L - 2L) | 50,000 | 1,50,000 | | **Cash Generated from Operations** | | **4,90,000** | | Less: Tax Paid (Previous year's provision) | | (50,000) | | **Net Cash flows from Operating Activities** | | **4,40,000** | **2. Cash Flows from Investing Activities** | Particulars | Amount (₹) | |---|---| | Purchase of Property, Plant and Equipment ($7,00,000 - 3,00,000$) | (4,00,000) | | Purchase of Non-Current Investments ($4,00,000 - 1,00,000$) | (3,00,000) | | **Net Cash outflow from Investing Activities** | **(7,00,000)** | **Working Note 1: Calculation of Net Profit before Tax** Profit earned during the year = $3,00,000 - 1,50,000 = ₹1,50,000$. Add: Transfer to General Reserve = $2,00,000 - 1,50,000 = ₹50,000$. Add: Provision for Tax for Current Year = ₹1,00,000. Net Profit before Tax = $1,50,000 + 50,000 + 1,00,000 = ₹3,00,000$.

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Particulars	Note No.	31.03.2024 (₹)	31.03.2023 (₹)
I - Equity and Liabilities:
1. Shareholders' Funds
(a) Share Capital		10,00,000	5,00,000
(b) Reserves and Surplus	1	5,00,000	3,00,000
2. Non-Current Liabilities
Long-term Borrowings (10% Debentures)	2	4,00,000	4,00,000
3. Current Liabilities
(a) Short-term Borrowings (Bank OD)	3	1,00,000	1,00,000
(b) Short-term Provisions (Tax Prov)	4	1,00,000	50,000
Total		20,00,000	13,50,000
II - Assets:
1. Non-Current Assets
(a) Property, Plant and Equipment		7,00,000	3,00,000
(b) Non-Current Investments		4,00,000	1,00,000
2. Current Assets
(a) Inventories		2,00,000	2,50,000
(b) Trade Receivables		3,00,000	4,00,000
(c) Cash and Cash Equivalents		4,00,000	3,00,000
Total		20,00,000	13,50,000