Page 240 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Unit 13: Cash Flow Analysis (As Per AS-3)

Notes
Example: From the information as contained in the income statement and the balance

sheet of SLV Ltd., you are required to prepare a cash flow statement using (i) Direct Method and
(ii) Indirect Method.
1. Income Statement and Reconciliation of Earnings for the year ended 31.3.2007

Particulars `
Net Sales 25,20,000
Less: Cost of sales 19,80,000
Depreciation 60,000
Salaries and wages 2,40,000
Operating expenses 80,000
Provision for taxation 88.000 24.48,000
Net operating profi t 72,000
Non-recurring income:
Profit on sale of equipment 12.000

84,000
Retained earnings (balance in profit & loss account 1,51,800

brought forward)
2,35,800
Dividend declared and paid during the year 72,000
Profit & Loss account balance as on 31.3.2007 1.63,800

2. Comparative Balance Sheets

Particulars 31.3.2006 31.3.2007
` `
Fixed assets
Land 48,000 96,000
Building and equipments 3,60,000 5,76,000
Current assets
Cash 60,000 72,000
Debtors 1,68,000 1,86,000
Stock 2,64,000 96,000
Advances 7,800 9,000
9,07,800 10,35,000
Capital 3,60,000 4,44,000

Surplus in profit & loss A/c 1,51,800 1,63,800
Sundry creditors 2,40,000 2.34,000
Outstanding expenses 24,000 48,000
Income tax payable 12,000 13,200
Accumulated depreciation on building and equipments 1,20,000 1,32,000
9,07,800 10,35,000

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