Page 164 - DMGT403_ACCOUNTING_FOR_MANAGERS

Unit 7: Fund Flow Statement

The income statement of Software Securities Ltd. is as under Notes
Sales 1602000
Less cost of sale 837000
Less operating exp. 397800
Less interest exp. 21600
Loss on sale of equipments 3600
126000

Net income before tax 342000
Provision of tax 117000
Net Income after tax 225000
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 hel(d).
(d) Interest expenses was 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.
(g) Equity shares of 162000 were issued for cash at par.
(h) Income tax paid during the year amounted to 117000.

Prepare the fund flow statement with both the methods.
10. "Fund flow statements can be used to identify a variety of problems in the way a company
operates." Illustrate the statement by the help of suitable examples.

Answers: Self Assessment

1. (a) 2. (a)
3. (a) 4. (c)
5. (a) 6. (a)
7. (a) 8. (b)
9. (a) 10. (b)

11. (a) 12. (a)
13. (d) 14. (d)
15. (a)

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