Question

1. The net profit before taxes as per the profit and loss account, of Gaman Ltd is Rs 269244. With the given set of information, classify the given items as (operating / investing / financing), share the correct classification with logical reasoning

And calculate the cash flow from operating activities

Loss on sale of asset

95780

dividend income

26000

interest income

35000

finance cost paid on debentures

12000

gain on sale of investment

45000

Depreciation on fixed assets

85000

Amortisation Expenses

110000

Answer 1

Solution:

All the above items fall under operating activities.

Items classified in this category are an entity's primary source of revenue, so cash flows are generally associated with revenues and expenses.

 

The cash flow statement from operating activities is as below: