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4.2 Analysis of Financial Statements—CBSE XII
Step 5: Cash and Cash Equivalents balance in the beginning of the period is added to the cash flows as
arrived under Step 4. The amount so determined should be equal to Cash and Cash Equivalents
balance at the end of the year.

Proposed Dividend
Proposed Dividend, both on Equity Shares and Preference Shares are paid after being
declared (approved) by the shareholders in the Annual General Meeting. Annual General
Meeting is held after the end of the financial year, i.e., in the next financial year.
AS-4 (Revised), Contingencies and Events Occurring After the Balance Sheet Date
prescribes that Proposed Dividend is not to be provided in the books of account
but is to be disclosed (shown) in the Notes to Accounts as Contingent Liability being
payable upon being declared (approved) by the shareholders. Dividend is an appropriation
of Profit and is deducted from Surplus, i.e., Balance in Statement of Profit & Loss in
the Note to Accounts on Reserves and Surplus in the year in which dividend is paid.

FORMAT OF CASH FLOW STATEMENT (INDIRECT METHOD) for the year ended ...
[As per Accounting Standard-3 (Revised)]

Particulars `
I. Cash Flow from Operating Activities
(A) Net Profit before Tax and Extraordinary Items (as per Working Note) ...
Adjustment for Non-cash and Non-operating Items
(B) Add: Items to be Added
— Depreciation ...
— Goodwill, Patents and Trademarks Amortised ...
— Interest on Bank Overdraft/Cash Credit ...
— Interest on Borrowings (Short-term and Long-term) and Debentures ...
— Loss on Sale of Fixed Assets ...
— Increase in Provision for Doubtful Debts* ... ...
...
(C) Less: Items to be Deducted
— Interest Income ...
— Dividend Income ...
— Rental Income ...
— Gain (Profit) on Sale of Fixed Assets ...
— Decrease in Provision for Doubtful Debts* ... ...
(D) Operating Profit before Working Capital Changes (A + B – C) ...
(E) Add: Decrease in Current Assets and
Increase in Current Liabilities
— Decrease in Inventories (Stock) ...
— Decrease in Trade Receivables (Debtors/Bills Receivable) ...
— Decrease in Accrued Incomes ...
— Decrease in Prepaid Expenses ...
— Increase in Trade Payables (Creditors/Bills Payable) ...
— Increase in Outstanding Expenses ...
— Increase in Advance Incomes ... ...