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Cash Flow Statement—Based on Accounting Standard-3 (Revised) 3.17
2. Dr. PROVISION FOR TAX ACCOUNT Cr.
Particulars ` Particulars `
To Bank A/c (Tax Paid) 60,000 By Balance b/d 50,000
To Balance c/d 65,000 By Statement of Profit and Loss (Provision) 75,000
1,25,000 1,25,000
3. Share Issue Expenses written off ` 40,000 will not be taken in Cash Flow from Operating Activities because it is written off
from Securities Premium Reserve. It does not affect current year’s profit.
4. Dr. 10% NON-CURRENT INVESTMENTS ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 60,000 By Bank A/c (Sale) [` 40,000 – ` 10,000 (Loss)] 30,000
To Capital Reserve A/c (Profit) 5,000 By Capital Reserve A/c (Loss) 10,000
To Bank A/c (Purchases)—Bal. Fig. 1,60,000 By Bank A/c (Sale) 25,000
By Balance c/d 1,60,000
2,25,000 2,25,000

5. Capital Reserve = ` 5,000 + ` 5,000 – ` 10,000 = Nil.
Or
Dr. CAPITAL RESERVE ACCOUNT Cr.
Particulars ` Particulars `
To 10% Non-current Investments A/c 10,000 By Balance b/d 5,000
By 10% Non-current Investments A/c 5,000
10,000 10,000
6. As the Profit/Loss on sale of Non-current Investments have been transferred to Capital Reserve and not to Statement of
Profit and Loss, such Profit/Loss will not be adjusted to calculate Operating Profit.
Illustration 10.
From the following Balance Sheet of Grow More Ltd., prepare Cash Flow Statement:
BALANCE SHEET
Particulars Note No. 31st March, 31st March,
2019 (`) 2018 (`)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 10,00,000 8,00,000
(b) Reserves and Surplus 1 3,00,000 2,10,000
2. Non-Current Liabilities
Long-term Borrowings (10% Debentures) 2,00,000 ...
3. Current Liabilities
(a) Trade Payables 7,00,000 8,20,000
(b) Short-term Provisions 2 1,00,000 70,000
Total 23,00,000 19,00,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets: Tangible 3 13,00,000 9,00,000
(b) Non-current Investments 1,00,000 ...
2. Current Assets
(a) Inventories 4,00,000 2,00,000
(b) Trade Receivables 5,00,000 7,00,000
(c) Cash and Bank Balances ... 1,00,000
Total 23,00,000 19,00,000

Note: Dividend proposed for the years 2017–18 and 2018–19 are ` 2,00,000 and ` 2,50,000 respectively.