1.

From the following information, calculate cash flow from operating activities using direct method.

Answer»

Solution :
Working Notes:
1. CASH Receipts from Customers is calculated as under :
Cash Receipts from Customers = Revenue from Operations + Trade Receivables
in the beginning – Trade Receivables in the END
= RS 2,20,000 + Rs 33,000 – Rs 36,000
= Rs 2,17,000
2. Purchases= Cost of Revenue from Operations – OPENING
Inventory + Closing Inventory
= Rs 1,20,000 – Rs 22,000 + Rs 27,000
= Rs 1,25,000
3.Cash payment to suppliers = Purchases + Trade Payables in the beginning – Trade Payables in the end
= Rs 1,25,000 + Rs 17,000 – Rs 15,000
= Rs 1,27,000
4. Cash Expenses= Expenses on Accrual basis – Prepaid Expenses
in the beginning and Outstanding Expenses in the end + Prepaid Expenses in the
end and Outstanding Expenses in the beginning
5. Cash Paid to Employees = Rs 30,000 + Rs 2,000 – Rs 3,000
= Rs 29,000
6.Cash Paid for Insurance Premium = Rs 8,000 – Rs 5,000 + Rs 5,500
= Rs 8,500
7.Income Tax Paid = Rs 10,000+Rs 3,000 – Rs 2,000
= Rs 11,000
8. It is IMPORTANT to note here that there are no extraordinary items.


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