Page 131 - DCOM302_MANAGEMENT_ACCOUNTING

Management Accounting

Notes 4. Since everything has some utility, analyse the cash flow statement analysis and explain its

various utilities.
5. Discuss the procedure of determining cash provided by operating activities. Give suitable
example to illustrate your answer.

6. The following is the abstract of balance sheet of Software securities ltd for the year 2005 and
2006.

2005 2006 2005 2006
Liabilities (`) (`) Assets (`) (`)
Provision for 1,08,000 3,96,000 Land 26,000 81,000
depreciation
Retained earning 2,44,800 3,70,800 Building 60,000 3,60,000
9% Debenture 2,70,000 1,98,000 Accumulated depreciation 19,800 37,800
on building
Account payable 72,000 41,400 Equipment 1,22,400 3,47,400
Expense payable 0 18,000 Accumulated depreciation 18,000 50,400
on Equipment
Stock in hand 10,800 97,200
Account receivable 36,000 1,22,400
Cash in hand 66,600 97,200
Preliminary expenses 10,800 7,200
The income statement of Software Securities Ltd. is as under
Sales 16,02,000
less cost of sale 8,37,000

less operating exp. 3,97,800
less interest exp. 21,600
loss on sale of equipments 3,600
1,26,000

Net income before tax 3,42,000
Provision of tax 1,17,000
Net Income after tax 2,25,000
Additional Information:
(a) Operating expenses include depreciation of ` 59400 and charges from preliminary
expenses of ` 3600.
(b) Land was sold at its book value.
(c) Cash dividend paid for the year 2006 amounted to ` 27000 and fully paid bonus
shares were given in the ratio of 2 shares for every 3 shares held.
(d) Interest expenses were paid in cash.
(e) Equipment with a cost of ` 298800 was purchased for cash .Equipment with a cost of
` 73800 (book value ` 64800) was sold for ` 61200.
(f) Debenture for ` 18000 were redeemed for cash and for ` 54000 were redeemed by
converting into equity shares at par value.

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