5. From the following Balance Sheets of Roop Ltd., prepare a cash flow statement. I. Equity and Liabilities 2021 (Rs.) Equity Share Capital 15000 12% Preference share capital 7500 2000 1500 3750 29750 General Reserve P & L A/C Creditors Total II. Assets Goodwill Building Plant Debtors Stock Cash Total Depreciation charged on plant was Rs. 1000 and on building Rs. 6000. [Ans. Cash from operations Rs. 8150; Net decrease in cash Rs. 350. Purchase of plant Rs. 7000; purchase of building Rs. 4000]. 3600 8000 4000 11900 1000 1250 27950 2022 (Rs.) 2,0000 5000 3500 2400 4950 35850 2000 6000 10000 15450 1500 900 35850
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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![5. From the following Balance Sheets of Roop Ltd., prepare a cash flow statement.
I. Equity and Liabilities
2021 (Rs.)
Equity Share Capital
15000
12% Preference share capital
7500
General Reserve
2000
P & LA/C
1500
Creditors
3750
Total
29750
II. Assets
Goodwill
Building
Plant
Debtors
Stock
Cash
Total
Depreciation charged on plant was Rs. 1000 and on building Rs. 6000.
[Ans. Cash from operations Rs. 8150; Net decrease in cash Rs. 350.
Purchase of plant Rs. 7000; purchase of building Rs. 4000].
3600
8000
4000
11900
1000
1250
27950
2022 (Rs.)
2,0000
5000
3500
2400
4950
35850
2000
6000
10000
15450
1500
900
35850](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7a7c291-6116-48d0-8dfb-2128ed51b462%2F7bc4974f-1280-49e5-be2c-e4414bdb828d%2Ffirlg3l_processed.png&w=3840&q=75)
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