Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

Read the following information to answer.
On the basis of case study given below, answer the question which follows:
"Mikku on alumni of IIT Delhi initiated his start-up "Gajanan Lid.," in the year 2016. His profit in the year 2020-21 after all appropriation was ₹625000. This profit was arrived after taking the following items into consideration:

Loss on Sale of fixed Assets ₹500000
Goodwill written off ₹380000
Transfer to reserve ₹355000
Provision for tax ₹270000
Interest on Debentures paid ₹165000
Particulars 2020(₹) 2021(₹)
Prepaid Expenses 25000 10000
Accrued interest 40000 68000
Trade payables 700000 400000
Inventories 650000 550000



Cash from operating activities before tax will be:

Options:

₹2738000

₹2082000

₹2378000

₹2862000

Correct Answer:

₹2082000

Explanation:

Profit before Tax                                       ₹1250000
Add: Amortisation        380000
        loss on Sale         500000
        Interest paid       165000                  ₹1045000
Operating Profit before Working Capital   = 22, 95,000
change in working capital
+ Prepaid Exp      15,000
+ Stock                1,00,000
- Accrued Int.       28,000
- Trade Payables  3,00,000                         (₹213000)
 Cash flow from operating profit before tax = ₹2082000