3increase in loan or mortgage if the balance of loan

Info icon This preview shows pages 121–124. Sign up to view the full content.

View Full Document Right Arrow Icon
(3)Increase in loan or mortgage: If the balance of loan or mortgage increases during the current year, it will be assumed that additional loans have been borrowed and cash flow inside the business has taken place The change in the value of non current liabilities will result in the outflow of cash in the following cases: (4)Redemption of share capital or decrease in share capital: In certain cases company redeems its redeemable preference shares and thus outflow of cash takes place. Decrease in the balance of capital during the current year is assumed to be the redemption (5)Repayment of debentures: Debentures are the loans taken by the company. These debentures are redeemed as per the terms of issue. Redemption of debentures will result in outflow of cash. Decrease in the value of debentures is assumed to be payment of debentures. (6)Decrease in loan or mortgage: in case of payment of loan or mortgage, cash will reduce and outflow of cash will takes place (7)Payment of tax and dividend: Payment of taxes and dividend is the normal feature of the company. Whenever taxes and dividends are paid cash goes outside the business. If the balance of provision of taxation regarding previous and current years is given, it may be assumed that the previous year’s provision of taxes has been paid during the current year. In case of adjustment provision for tax account is prepared to calculate the amount of taxed paid during the year. The same treatment is accorded to dividend. 8.3.6.3.Changes in non current assets: Change in non current assets generally fixed assets also results in inflow or outflow of cash. Sale or decrease in the value of fixed assets: sometimes the company sells a part of its land, building, plant, machinery, furniture and vehicles etc. the sale fetches cash and inflow of cash takes place. Decrease in the value of fixed assets is assumed to be its sales. Cash from operations: cash from operations for the purpose of cash flow statement is the net flow. Funds from operations represent the net flow in a rough way. Further adjustments as discussed above are required to arrive at the net flow of cash. This is tabled below:
Image of page 121

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
115 Cash from operations Rs. Rs. Add: Decrease in debtor’s xxx Decrease in stock xxx Decrease in accrued income xxx Decrease in prepaid expenses xxx Increase in creditor’s xxx Increase in outstanding expenses xxx xxx Less: Increase in debtor xxx Increase in stock xxx Increase in accrued income xxx Increase in prepaid expenses xxx Decrease in creditor’s xxx Decrease in outstanding expenses xxx xxx REPORT FORM CASH FLOW STATEMENT For the year ended 31 st December ………. Rs. Rs. Opening balances Cash Bank Add: sources of cash: --- Issue of shares --- Issue of debentures --- Raising of long term loans --- Sale of fixed assets --- Dividends --- Cash from operations --- Total of cash inflow (A) ---
Image of page 122
116 Less: application of cash: --- Redemption of preference shares --- Repayment of debentures --- Purchase of fixed assets --- Repayment of long term loans --- Payment of taxes --- Payment of dividend --- Cash lost in operations ---
Image of page 123

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 124
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern