Cash Flow Statement Page 21
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30MODULE - 6A
Cash Flow Statement
Analysis of Financial Statements
Solution
To solve this problem, one should find out the amount of provision for tax
charged to Profit and Loss Account in the year 2007.
Provision for Taxation Account
Notes
Dr
Cr
Particulars
Amount
Particulars
Amount
Rs.
Rs.
Bank (payment)
40,000
Balance b/d
50000
Balance c/d
70000
Profit and loss A/c
60000
(Balances Figure)
110000
110,000
(i) Rs. 40000 is an outflow of cash
(ii) Cash provided from operating activities will be calculated as
Net Income after taxation
80000
Add: Provision for taxation treated as non-cash expense
60,000
140,000
Illustration 9
The following comparative balance sheets contain the relevant information
about provision for taxation.
Labilities
2006
2007
Rs.
Rs.
Provision for Taxation
20000
30000
You are informed that Rs. 50,000 was charged to Profit and Loss Account
for the year 2007. Ascertain how much cash was used.
Solution
Provision for Taxation Account
Dr
Cr
Particulars
Amount Particulars
Amount
Rs
Rs
Bank (Balancing figure)
40000 Balance b/d
20000
Balance c/d
30000 Profit and Loss Account
50000
70000
70000
82
ACCOUNTANCY
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