j66 1.800 (8.000) (6.200) Cash Flows Investing Activities: Sale of Machinery Purchase of Machinery Net Cash used for Investing Activities Cash Flows from Financing Activities Payment of Dividend Mortgage Loan repaid Net Cash used in Financing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents as on 1st Dec., 1993 Cash and Cash Equivalents 31st Dec, 1993 (Cash 600 + Bank 8,000) (23.000) (70.000) (93,000) 8.100 500 8,600 1. True or False (a) A Cash flow statement reveals the effects of transactions involving movement of cash. (b) The term 'Funds' mean 'Current Assets' in Case of a Cash Flow Analysis. (c) A 'Cash Flow Statement can very well be equated with an "Income Statement". (d) A company should keep large balances of cash in hand so it can meet all contingencies. (e) Increase in provision for doubtful debts should be added back in order to find cash from operations. (1) Funds flow statements and cash flow statement are one and the same. Illustration 12.7 The Balance Sheet of XYZ Limited are as follows: BALANCE SHEET Liabilities 2004 2005 (Figures in 2004 thousand Assets 2004 2005 Equity General Reserve P.& L. Ale Provision for Taxation Overdraft Sundry Creditors Proposed Dividend 600 200 800 300 500 200 1.400 1.080 3.180 800 100 900 350 550 1.230 1.774 3554 800) 900 Fixed assets 300 400 Additions 200 300 300 400 Depreciation 300 464 1.200 1.000 Investments 80 90 Stock Debtors 3.180 3,554 PROFIT AND LOSS ACCOUNT for the year ending.. 2004 2005 Assets 250 450 By Trading Profit 80 90 By Profit on sale of Investment 100 100 By Income Tax excess provided 200 300 in the previous year By Balance from last year 630 940 Particular 2004 2005 430 660 30 To Taxation To Proposed Dividend To Transfer to General Reserve To Balance of 200 630 50 200 9.40 Additional Information (1) For the year ending 31 December, 2005, purchases were 60 lakhs and sales were 70 lakhs. (2) Trading profit for the year ended 31 December, 2005 was arrived at after charging depreciation 50,000 and directors remuneration * 1,20,000. Prepare the Cash Flow Statement