Comprehension Passage
Charles Ltd., made a profit of Rs. 1,00,000 after charging depreciation of Rs. 20,000 on assets and a transfer to general reserve of Rs. 30,000. The goodwill amortised was Rs. 7,000 and gain on sale of machinery was Rs. 3,000.
Other information available to you (changes in the value of current assets and current liabilities) are:
- Trade receivables showed an increase of Rs. 3,000,
- Trade payables an increase of Rs. 6,000,
- Prepaid expenses an increase of Rs. 200,
- Outstanding expenses a decrease of Rs. 2,000.
Ascertain cash flow from operating activities.
Additional Information:
| Particulars | March 31, 2017 (Rs.) | March 31, 2016 (Rs.) |
|---|---|---|
| Trade Receivables | 20,00,000 | 40,00,000 |
| Trade Payables | 20,00,000 | 10,00,000 |
| Other Expenses payable (administrative) | 10,000 | 20,000 |
| Prepaid Administrative Expenses | 10,000 | 10,000 |
| Outstanding Trading Expenses | 20,000 | 40,000 |
| Advance Trading Expenses | 20,000 | 40,000 |
| Provision for Taxation | 10,00,000 | 12,00,000 |
When Charles Ltd. made a profit of Rs. 1,00,000, which of the following adjustments would be made to calculate the cash flow from operating activities?
1
Add back depreciation of Rs. 20,000
2
Deduct depreciation of Rs. 20,000
3
Add back gain on sale of machinery of Rs. 3,000
4
Deduct gain on sale of machinery of Rs. 3,000