Cash Flow Statement Page 27
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30MODULE - 6A
Cash Flow Statement
Analysis of Financial Statements
(B)
Cash flow from Investing Activities :
Purchase of Fixed Assets (See fixed assets)
(49000)
Net cash used in Investing Activities
(49000)
(C)
Cash Flow from financing Activities
Proceeds from Raising Secured loan
4000
Notes
Dividend paid
(1000)
Net Cash flow from Financing Activities
39000
Net Decrease in Cash a Cash equivalent
(13000)
Working Notes :
1.
Fixed Assets A/c
Particulars
Amount Particulars
Amount
Rs.
Rs.
Balance b/d
50,000 Depreciation A/c (Given)
8,000
Cash A/c (Purchases)
49,000 Balance C/d
91,000
(Bal. fig.)
99,000
99,000
2.
Provision for Tax Account (Tax Payable A/c)
Dr.
Cr.
Particulars
Amount Particulars
Amount
Rs.
Rs.
Cash A/c (Tax paid)
2,000 Balance C/d
1,000
(Bal Fig)
(Given)
Balance c/d
3,000 Profit & loss A/c
4,000
(Given)
(Provision made during
the year)
5,000
5,000
Limitations of cash flow statement
Though it is true that cash flow statement is very useful now-a-days and
serves many purposes. But it is necessary to take certain precautions while
making use of this important tool. The reason is that misleading conclusions
might be found by not properly relating net income figure to the cash flow.
Some of the significant limitations of Cash Flow Statement are given below:
It is very difficult to precisely define the term ‘cash’
There are controversies over a number of items like cheques, stamps,
postal orders etc. to be included in cash or not.
88
ACCOUNTANCY
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