Case Study Accountancy Class 12
Cash Flow Statement
Case Study
Read the following hypothetical text and answer the given questions on the basis of the same:
Krishika an alumni of IIM Ahemdabad initiated her startup Krishika Ltd. in 2018. The profits of Krishika Ltd. in the year 2019-20 after all appropriations was ₹ 31,25,000. This profit was arrived after taking into consideration the following items:-
Sl. No | Particulars
| Amount (₹) |
1 | Gain on sale of fixed tangible assets | 12,50,000 |
2 | Goodwill written off | 7,80,000 |
3 | Transfer to General Reserve | 8,75,000 |
4 | Provision for taxation | 4,37,500 |
Additional Information:-
Particulars | 31-03-2020 ₹ | 31-03-2019 ₹ |
Prepaid Expenses | 7,50,000 | 5,00,000 |
Inventory | 10,50,000 | 8,20,000 |
Trade Payables | 4,50,000 | 3,50,000 |
Trade Receivables | 6,20,000 | 5,90,000 |
Question 1:
Net Profit before tax will be ₹……………………………. (Choose the correct alternative)
(a) 22,50,000
(b) 35,62,500
(c) 39,67,500
(d) 44,37,500
Answer: (d) 44,37,500
Explanation:
Particulars | ₹ |
Net Profit after all appropriation Add: Transfer to General Reserve Add: Provision For Taxation | 31,25,000 8,75,000 4,37,500 |
Net Profit Before Tax | 44,37,500 |
Question 2:
Operating profit before working capital changes will be ₹…………………… (Choose the correct alternative)
(a) 52,17,500
(b) 64,67,500
(c) 39,67,500
(d) 39,69,500
Answer: (c) 39,67,500
Explanation:
Particulars | ₹ |
Net Profit Before Tax
Add: Goodwill Written Off
Less: Gain on sale of fixed tangible assets | 44,37,500
7,80,000
(12,50,000) |
Operating profit before working capital changes | 39,67,500 |
Question 3:
Cash from operating activities before tax will be ₹…………………… (Choose the correct alternative)
(a) 35,57,500
(b) 40,67,500
(c) 37,87,500
(d) 35,67,300
Answer: (a) 35,57,500
Explanation:
Particulars | ₹ |
Net Profit Before Tax
Add: Goodwill Written Off
Less: Gain on sale of fixed tangible assets | 44,37,500
7,80,000
(12,50,000) |
Operating profit before working capital changes | 39,67,500 |
Add: Increase in Trade Payables
Less: Increase in Prepaid Expenses Less: Increase in Inventory Less: Increase in Trade Receivables | 1,00,000
(2,50,000) (2,30,000) (30,000) |
Net Profit Before Tax | 35,57,500 |
Question 4:
Cash flow from Operating Activities will be ₹…………………… (Choose the correct alternative)
(a) 39,95,000
(b) 31,20,000
(c) 40,67,500
(d) 31,00,000
Answer: (b) 31,20,000
Explanation:
Particulars | ₹ |
Net Profit Before Tax
Add: Goodwill Written Off
Less: Gain on sale of fixed tangible assets | 44,37,500
7,80,000
(12,50,000) |
Operating profit before working capital changes | 39,67,500 |
Add: Increase in Trade Payables
Less: Increase in Prepaid Expenses Less: Increase in Inventory Less: Increase in Trade Receivables | 1,00,000
(2,50,000) (2,30,000) (30,000) |
Net Profit Before Tax
Less: Provision For Tax | 35,57,500
(4,37,500) |
Cash flow from Operating Activities | 31,20,000 |

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