Q1.From the following information prepare a 'cash flow statement' for Ronak Ltd. Balance sheet of Ronak Ltd as at 31 st March, 2011 and 2012. Note 31st March, 31st March, 2011 () Particulars No. 2012 () L. EQUITY AND LIABILITIES 1. Shareholders' Funds (a) Equity Share Capital (b) Reserves and Surplus 2. Non-current Liabilities Long-term Borrowings (12% debentures) 3. Current Liabilities 2.50.000 3,50,000 40,000 5,000 60,000 1, 00,000 Trade Payables 1,50,000 1,25,000 5,00,000 5,80,000 Total II. ASSETS 1. Non-current Assets (a) Fixed Assets (b) Non-current Investments 2. Current Assets (a) Trade Receivables 2,00,000 1,00,000 2,80,000 1,00.000 1,50,000 30,000 20,000 5,00,000 1,60,000 40.000 (b) Cash and Cash Equivalents (c) Other Current Assets (Prepaid expenses) Total 5,80,000 Notes to Accounts 31st March, 2011 (E) 31st March, Particulars 2012 (7) 1. Reserves and Surplus Surplus, i.e. Balance in Statement of Profit and Loss Securities Premium Reserve 40,000 (20,000) 25,000 5,000 40,000 Additional Information (i)Debentures were issued on 1st April, 2011. (ii)During the year a machine included in fixed assets costing Rs 1,20,000 was purchased and another machine of the book value of Rs 30,000 was sold at a loss of Rs 2,000 [Hint: Interest calculations: 1. Interest on debentures shall be calculated on opening balance if there is no redemption or issue. 2. If there is an issue of debentures during the year and the date is specified, the interest is the sum of interest on opening balance and the interest on the additional issue from the date of issue. 3. If the date of issue is not given, you can assume that the issue had taken place in the end of the year and calculate on opening balance. 4. It is calculated in similar way for redemption]
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.
![Q1.From the following information prepare a 'cash flow statement' for Ronak Ltd.
Balance sheet of Ronak Ltd as at 31st March, 2011 and 2012.
31st March, 31st March,
2011 ()
Note
Particulars
No.
2012 (१)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
2,50,000
40,000
3,50,000
(a) Equity Share Capital
(b) Reserves and Surplus
2. Non-current Liabilities
Long-term Borrowings (12% debentures)
3. Current Liabilitios
Trade Payables
Total
II. ASSETS
1. Non-current Assets
5,000
60,000
1, 00,000
1,50.000
1.25.000
5,00,000
5,80,000
(a) Fixed Assets
2,00,000
2.80.000
1,00,000
1,00.000
(b) Non-current Investments
2. Current Assets
1,60,000
40,000
1,50,000
(a) Trade Receivables
(b) Cash and Cash Equivalents
(c) Other Current Assets (Prepaid expenses)
30,000
20,000
5,00,000
Total
5,80,000
Notes to Accounts
31st March
2011 ()
31st March,
2012 (?)
Particulars
1. Reserves and Surplus
40,000
(20,000)
Surplus, i.e. Balance in Statement of Profit and Loss
Securities Premium Reserve
25,000
40,000
5.000
Additional Information
(i)Debentures were issued on 1st April, 2011.
(ii) During the year a machine included in fixed assets costing Rs 1,20,000 was
purchased and another machine of the book value of Rs 30,000 was sold at a loss of Rs
2,000
[Hint: Interest calculations:
1. Interest on debentures shall be calculated on opening balance if there is no
redemption or issue.
2. If there is an issue of debentures during the year and the date is specified,
the interest is the sum of interest on opening balance and the interest on
the additional issue from the date of issue.
3. If the date of issue is not given, you can assume that the issue had taken
place in the end of the year and calculate on opening balance.
4. It is calculated in similar way for redemption]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffd315006-a654-453e-88fb-4b2bd69a4b88%2F92371290-04ab-41c2-90a4-0dffe7198553%2Fa1jawpni_processed.jpeg&w=3840&q=75)
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