710 170 (694) (200) (300) (314) Funds from Operations Adjustments for: Decrease in Stock Increase in Debtors Decrease in Creditors Tax paid Net Cash used for Operating Activities Cash flows from Investing Activities: Fixed Assets purchased Investment sold Net Cash from Investing Activities Cash Flows from Financing Activities: Proceeds from Issuance of Share Capital Dividends Net Cash from Financing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents as on 1st Jan., 2005 Cash and Cash Equivalents as on 31st Dec. 2005 (100) 230 130 j67 100 (80) 20 (164) (300) (464) 2. Choose the correct answer: (1) Cash from operation is equal to: (a) Net profit plus increase in outstanding expense, (a (b) Net profit plus increase in debtors, (c) Net profit plus increase in stock. (1) Increase in the amounts of debtors results in: (a) Decrease in cash. (b) Increase in cash, (c) No change in cash. (i) Increase in the amount of bills payable results in: (a) Increase in cash, (b) Decrease in cash (c) No change in cash. 3. State the effect of the following transactions, considered individually, on funds (working capital concept) and funds (cash concept): (a) Purchase of goods for cash. (b) Purchase of building against a long-term loan payable. (c) Bonus paid in the form of fully paid shares. Cash Flow and Funds Flow Statements Illustration 12.8. The financial of M/s A and B on 1st Jan. and 31st Dec., 2004 was as follows: Liabilities 1 Jan. 31 Dec Assets 1 Jan. 31 Dec. +