NCERT Solutions for Class 12 Accountancy Chapter 6 Cash Flow Statement, Download PDF

NCERT Solutions for Class 12 Accountancy Chapter 6 Cash Flow Statement: Students can find attached NCERT Solutions for CBSE Class 12 Accountancy Part 2, Chapter 6, Cash Flow Statement. A PDF download link has been attached below for the free download of complete NCERT Solutions.
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NCERT Solutions for Class 12 Accountancy Chapter 6 Cash Flow Statement

Class 12 Accountancy NCERT Solutions: Here we have presented complete NCERT Solutions for Class 12 Accountancy Part 2, Chapter 6, Cash Flow Statement. Here, NCERT Solutions for class 12 Accountancy chapter 6 all exercise pdf download links are available for free. The entire NCERT Exercise for Cash Flow Statement is presented below for you to practice and prepare for Board Examinations.

Short Answer Questions, Long Answer Questions, and Numerical Problems have been covered in detail here. CBSE’s latest Syllabus and curriculum have been referred to in making of these NCERT Solutions. We have closely looked at the deleted topics and chapters and made sure that the updated Exercise is presented before you all.

Practising NCERT Solution strengthens your knowledge about the chapter. It also helps you brainstorm, imprints formulas in your mind during practise, and also brings clarity to concepts. Further, NCERT Solutions can also help you in preparation for related competitive examinations. Thus, it is important for students to constantly practise NCERT Solutions to improve their academic scores as well as build textual knowledge.

Related:

CBSE Class 12 Accountancy Syllabus 2023-24 (PDF)

CBSE Class 12 Accountancy Sample Paper 2023-24 (PDF)

NCERT Solutions for Class 12 Accountancy 2023-2024

MCQs for CBSE Class 12 Accountancy 2023-2024

Highlights of NCERT Solutions for Class 12 Accountancy Chapter 6- Cash Flow Statement

Students can find highlights for CBSE Class 12 Accountancy Chapter 6, Cash Flow Statement, NCERT Solutions here. 

Key Features of NCERT Solutions for Class 12 Accountancy Chapter 6- Cash Flow Statement

Here, some key features of NCERT Solutions have been presented here for your reference:

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NCERT Solutions for Class 12 Cash Flow Statement 

Short Answer Questions

1. What is a Cash flow statement?

Answer. Cash flow statement is one type of financial statement that shows the inflows and outflows of cash and cash equivalents.

2. How are the various activities classified while preparing cash flow statement?

Answer. While preparing the cash flow statement, various activities are classified under these three classifications, named as:

3. State the objectives of cash flow statement.

Answer. The objectives of cash flow statement are:

4. What are the objectives of preparing cash flow statement?

Answer. The objective of preparing cash flow statement is to assess the ability of a company to generate cash and cash equivalents and its ability to utilize its cash flows.

5. State the meaning of the terms:

6. Prepare a format of cash flow from operating activities.

Answer. The format of cash flow from operating activities is as follows:

Indirect Method

Net profit before tax and extraordinary items

 

Add: Non-cash expenses and non-operating

Depreciation

Goodwill

Interest Paid

Loss on sale of fixed assets

Foreign Exchange

 

 

 

 

 

 

Less: Non-operating Incomes

Dividend Received

Profit on sale of fixed assets

Interest Received

 

 

 

 

Operating profit before working capital changes

Add: Decrease in current assets

Add: Increase in current liabilities

Less: Increase in current assets

Less: Decrease in current liabilities

 

 

 

 

 

Cash generated from operating activities

 

Income tax paid

 

Cash flow before extraordinary items

 

Add/Less: Extraordinary items

 

Net cash flow from operating activities

 

7. State clearly what would constitute the operating activities for each of the following enterprises:

8. “The nature/type of enterprise can change altogether the category into which a particular activity may be classified.” Do you agree? Illustrate your answer.

Answer. Yes, the nature/type of enterprise can change altogether the category into which a particular activity may be classified. To illustrate this, here’s an example: Let’s take two firms, one is into financing services and the other one is into management services. For a financing firm, interest received or paid is classified under operating activities whereas, for the managing firm, interest paid is classified under financing activities and interest received as investing activities.    

Long Answer Questions

1. Describe the procedure to prepare Cash Flow Statement.

Answer. The procedure for preparing Cash Flow Statement has been mentioned in the form of the following steps:

2. Describe “Indirect” method of ascertaining Cash Flow from operating activities.

Answer.  Indirect method of ascertaining Cash Flow from operating activities starts from net profit or loss. Since the profit and loss statement incorporates the effects of operating services. It also includes certain non-operating items such as interest paid, profit/loss on sale of fixed assets, etc.) and non-cash items (such as depreciation, goodwill written-off, dividend declared, etc.

Various items included are:

a) Depreciation is a non-cash item and hence, Rs. 5,000 charged as depreciation does not result in any cash flow.

b) Finance costs of Rs. 5,000 is a cash outflow on account of financing activity.

c) Other income includes profit on sale of land: It is cash inflow from investing activity.

Under indirect method, net cash flow from operating activities is determined by adjusting net profit or loss for the effect of :

a) Non-cash items such as depreciation, goodwill written-off, provisions, deferred taxes, etc., which are to be added back

b) All investing and financing incomes are to be deducted from the amount of net profits while all such expenses are to be added back.

c) Increase in current assets and decrease in current liabilities are to be deducted while increase in current liabilities and decrease in current assets are to be added up.

Cash Flows from Operating Activities (Indirect Method)

Net Profit/Loss before Tax and Extraordinary Items

 

+

Deductions already made in Statement of Profit and Loss on account of

xxx

 

Non-cash items such as Depreciation, Goodwill to be Written-off.

 

+

Deductions already made in Statement of Profit and Loss on Account of

xxx

 

Non-operating items such as Interest.

 

Additions (incomes) made in Statement of Profit and Loss on

xxx

 

Account of Non-operating items such as Dividend received,

xxx

 

Profit on sale of Fixed Assets.

 

Operating Profit before Working Capital changes

Add : in case of increase in current assets (other than cash and cash equivalent) and decrease in current liabilities.

Less : in case of decrease in current assets (other than cash and cash equivalent) and decrease in current liabilities.

Cash Flows from Operation Activities before Tax and Extraordinary items

– Income Tax Paid

+/– Effects of Extraordinary Items

 

xxx xxx

xxx xxx

xxx

Net Cash from Operating Activities

xxx

3. Explain the major Cash inflow and outflows from investing activities.

Answer. The major cash inflows and outflows from investing activities are:

4. Explain the major Cash inflow and outflows from financing activities.

Answer. Major cash inflows and outflows from financing activities are:

FAQ

What topics have been covered in Accountancy chapter 6 class 12 solutions?

The following topics have been covered in Accountancy chapter 6 Class 12 solutions: Cash and cash equivalents, cash inflows and outflows, operating, financing, and investing activities, non cash items, and extraordinary items

Are NCERT Solutions for Class 12 Accountancy Chapter 6 Cash Flow Statement available for free?

Yes, NCERT Solutions for Class 12 Accountancy Chapter 6 Cash Flow Statement are available for free on our website, JagranJosh.com. Students can get free access to all the NCERT Solutions of the chapter along with a PDF download link

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