Accountancy Part BCash Flow Statement

If from the above informations, cash flow from operating activity is…

Read the following information to answer.

Rathi Udyog, made a profit of 72,000 after charging depreciation of Rs. 17,000 on fixed assets and paid Rs. 10,000 as interim dividend. The goodwill amortized was Rs. 12,000 and profit (Gain) on sale of furniture was Rs. 2,500.

The other informations were :

Trade Payable showed an increase of Rs. 7,000.

Outstanding expenses showed a decrease of Rs. 5,000.

Accrued Income showed an increase of Rs. 8,000.

Trade payable showed a decrease of Rs. 10,000.

Inventories showed a decrease of Rs. 3,000.

On the basis of above information answer the following questions.

If from the above informations, cash flow from operating activity is ascertained, then it is ascertained according to Accounting standard :

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → AS - 3

NCERT (2026-27 edition):
Cash Flow Statement – “Financial Statement of companies are prepared following the accounting standards prescribed in the companies Act, 2013. Accounting Standards are notified under section 133 of the Companies Act, 2013 vide Accounting Standards Rules, 2006 and are mandatory in nature. Companies Act, 2013 also specifies that if the accounting standards are not followed, financial statements will not be true and fair, which is a quality of financial statement. Financial Statements are defined in Companies Act, 2013 (Section 2 (40)] and includes Cash Flow Statement prepared in accordance with Accounting Standard- 3 (AS-3)- Cash Flow Statement.”