Example of cash flow statement, Cost Accounting

1. Shares were certified at a premium of Rs. 1.50' per share.

2. Throughout the year Taxation liability regarding of 2002 was Rs, 20,000 and paid.

3. Throughout the year, Rs. 11,000 was provided for depreciation on Machinery and Plant.

4.  An item of the plant the written down value Rs. 20,000 was sold on Rs. 25,000.

5. Throughout the year, a dividend @ 7.5 percent was paid.

6. Part of the investment costing Rs. 30,000 was sold at Rs. 35,000 and the profit was considered in Profit and Loss account.

Depends on the above information, we initially set ourselves to ascertain the cash inflow and outflow regarding Investment, Machineries and Plant and Tax, that cannot be determined through a mere inspection of their balances in two balance sheets. The duty is accomplished through preparing the respective accounts and examining the effects of the additional information on each of such.  It is followed through preparation of an "Adjusted the Profit and Loss a/c" to determine the actual net profit earned throughout the period, in the light of the additional information now obtainable. In the last stage, the "Cash flow statement" is prepared as in Table 3.

Investment Account

To Opening balance


By Sale



To P & L a/c (profit on sale)


By Closing balance



To Bank (Purchases)







1,65, 000




1,65, 000

Plant & Machinery Account

To Opening balance                          1,10,000                  By Sale                                     25,000

 To P & L a/c (profit on sale)             5,000                      By P & L a/c- depreciation   11,000

To Bank                                                91,000                     By Closing balance             1,70,000

         2,06,000                                                                     2,06,000

Provision for taxation

To Bank


By Opening Balance


By Closing balance


By P & L a/c


        55,000                                                                             55,000

Adjusted Profit and Loss Account

To General Reserve                       15,000 By Opening balance


To Dividend                                  30,000 By Dividend Equalisn. Reserve


To Provision for tax                      35,000 By Plant and Machineries profit on sale


To Depreciation                             11,000 By Investment-profit on sale.


By profit for the year


(balancing figure)


To Goodwill                                  10,000


To Preliminary expenses                 5,000


To Closing balance                        55,000




Table 3


Statement of Cash flow


for the period 1.4 2002 to 31.3.2003




Opening Cash balance as on 1.4.2002

Add/(deduct): Cash flow from

Operating Activities

Net profit (Ref: P&L Adjustment a/c)                                                       1,01,000



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Posted Date: 4/9/2013 1:58:03 AM | Location : United States

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