Cash Flow Statement Class 12 Notes

Small Business and Entrepreneurship Class 11 Notes — Financial Statements

A cash flow statement shows inflows(receipts) & outflows(payments) of cash during a particular period. Here are the cash flow statement class 12 notes.

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Format of Cash Flow Statement

Particulars	Details(Rs.)	Amt.(Rs)
*A. Cash Flows from Operating Activities* Net profit before tax Adjustments for non-cash & non-operating items: Add: Depreciation Preliminary Expenses Goodwill, Patents & trademarks amortized Interest paid on short-term & long-term borrowings Interest paid on Bank overdraft Loss on sale of fixed assets Increase in provision for doubtful debts Less: Interest Income Dividend Income Rental Income Gain on Sale of fixed assets Decrease in provision for doubtful debts Operating Profit Before Working Capital Changes Add: Decrease in Current Assets Increase in Current Liabilities Less: Increase in Current Assets Decrease in Current Liabilities Cash Generated from Operations Less: Income Tax paid *Net cash from (or used in) Operating Activity*	x	xx
B. *Cash Flows from Investing Activities* Proceeds from the sale of intangible fixed assets Proceed from the sale of intangible fixed assets like goodwill Proceeds from the sale of non-current investments Interest & Dividend received Rent received Purchase of tangible fixed assets purchase of intangible fixed assets like goodwill Purchase of non-current investment *Net Cash from (or used in) Investing Activities*	x	xx
C. Cash Flows from Financing Activities Proceed from the issue of shares & debentures Proceed from other long-term borrowings Proceed from short-term borrowings Payment of interim dividend Payment of proposed dividend of the previous year Interest paid on short-term & long-term borrowing Interest paid on Bank Overdraft Repayment of loans Redemption of Debentures *Net Cash from (or used in) Financing Activities*	x	xx
Net Increase(or decrease) in cash & cash equivalents (A+B+C) Add: Cash & Cash equivalent at the beginning of the year	x	xx
Cash & Cash equivalents at the end of the year		xx

Cash Flow Statement

Calculation of Net Profit Before Tax

Particulars	Amt. (Rs)
Net Profit of the current year	x
Add: Transfer of Reserves Proposed dividend of the previous year Interim dividend paid during the year Provision of Tax	x
Less: Refund of Tax	x
Net Profit Before Tax	xx

Net profit before tax

Treatment of Provision for Tax

If only balances of tax provision are given then the previous year’s provision is treated as tax paid & current year’s provision is treated as provision made.

If some adjustment is given along with balances of tax provision then provision for tax A/c is maintained.

Particulars	Rs.	Particulars	Rs.
Bank A/c (Tax paid)	x	Bal. b/d	x
Bal. c/d	x	P/L A/c (Provision made)	x
TOTAL	xx		xx

Provision for Tax A/c

Treatment of Machinery sold & purchased

Particulars	Rs.	Particulars	Rs.
Bal. b/d	x	Depreciation A/c	x
P/L A/c (Profit on Sale)	x	Bank A/c (Sale of Machinery)	x
Bank A/c (Purchase of Machinery)	x	P/L A/c (Loss on Sale of Machinery)	x
		Bal. c/d	x
TOTAL	xx		xx

Machinery A/c

Retirement of a Partner Class 12 Notes

If along with balances of machinery, the balance of accumulated depreciation is also given;

Particulars	Rs.	Particulars	Rs.
Bal. b/d	x	Accumulated Depreciation A/c	x
P & L A/c ( Profit on Sale of Machinery)	x	Bank A/c (Sale of Machinery)	x
Bank A/c (Purchase of Machinery)	x	P & L A/c (Loss on Sale of Machinery)	x
		Bal. c/d	x
TOTAL	xx		xx

Machinery A/c

Particulars	Rs.	Particulars	Rs.
Machinery A/c	x	Bal. b/d	x
Bal. c/d	x	Depreciation A/c	x
TOTAL	xx		xx

Provision for Depreciation A/c

Treatment of Proposed Dividend: The current year’s proposed dividend is not to be used. The previous year is taken as a dividend paid as well as the dividend proposed.

Points to Remember

A Bank Overdraft is a current liability shown in the Balance Sheet but in the cash flow statement, it is always treated as a loan.
If the value of intangible assets is reduced, it is added to operating activity but if the value of intangible assets is increased, it is adjusted in investing activity.