Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

W Ltd has given you the following information:
Machinery (Opening Balance) ₹50000
Machinery (closing Balance) ₹60,000
Accumulated Depreciation (opening balance) ₹25,000
Accumulated Depreciation (closing balance) ₹15,000

During the year, a machine costing ₹25,000 with accumulated depreciation of ₹15,000 was sold for ₹13,000. Calculate Cash Flow from Investing Activity.

Options:

₹22,000

 (₹22,000)

(₹35,000)

₹13,000

Correct Answer:

 (₹22,000)

Explanation:

Sale of Machinery 13,000
Less: Purchase of Machinery (35,000)
Net cash used in Investing Activities= 35000 -13000 = (22,000)
As figure is given in bracket shown negative or outflow in accounting so correct ans will be (22000).

Machinery Account

Particulars

J.F.

Amount(₹)

Particulars

J.F.

Amount(₹)

Balance b/d

 

50,000

Cash (proceeds from sale of machine)

 

 13,000

Statement of Profit and Loss
(profit on sale of machinery)

 3,000

Accumulated Depreciation

15,000

Cash (balancing figure:new machinery purchased)

35000

Balance c/d

 60,000

 

88,000

 

88,000

 

Accumulated Depreciation Account

Particulars

J.F.

Amount (₹)

Particulars

J.F.

Amount (₹)

Machinery

 

15,000

Balance b/d

 

25,000

Balance c/d

15,000

Statement of Profit and Loss
(Depreciation  provided during the year)

5,000

 

30,000

 

30,000