A cash flow statement shows inflows(receipts) & outflows(payments) of cash during a particular period. Here are the cash flow statement class 12 notes.
Topics Discussed
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 |
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 |
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 |
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 |
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 |
Particulars | Rs. | Particulars | Rs. |
Machinery A/c | x | Bal. b/d | x |
Bal. c/d | x | Depreciation A/c | x |
TOTAL | xx | xx |
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.
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