From the given ‘VLOOKUP’ syntax, find out the error and its reason using the worksheet: (i) = VLOOKUP(B5, C3:F10, 2, 0) (ii) = SQRT(VLOOKUP(B3, B3:F10, 2, 0) - 100) (iii) = VLOOKUP(B2, B3:F10, 5, 0) (iv) = VLOOKUP(B3, B3:B10, 2, 0) (v) = VLOOKUP(B6, B3:F10, 0, 0) (vi) = VLOOKUP(B6, B3:F10, 2, 0)/0
Official Solution
Correct Option: (1)
02
PYQ 2024
medium
accountancyID: cbse-cla
“A value or function or an arithmetic expression is recorded in ........”
1
Row
2
Column
3
Range
4
Cell
Official Solution
Correct Option: (4)
In spreadsheets, a value, function, or arithmetic expression is recorded in a cell, which is the intersection of a row and a column.
03
PYQ 2024
easy
accountancyID: cbse-cla
From the following Balance Sheet of Yogita Ltd., calculate ‘Cash flows from Investing Activities’ and ‘Cash flows from Financing Activities’. Show your working properly. Additional Information: (i) rupee50,000 was charged as depreciation on Plant and Machinery. A machinery costing rupee60,000 (Book Value Rupees 45,000) was sold for Rupees 42,000. (ii) Bank loan was repaid on 1stApril, 2022.
Official Solution
Correct Option: (1)
Journal Entries:
Cash Flow from Investing Activities: Proceeds from Sale of Machinery = |42, 000 Purchase of Machinery = |3, 25, 000
Net Cash Flow from Investing Activities = |(3, 25, 000 − 42, 000) = |(2, 83, 000) (Outflow)
Cash Flow from Financing Activities: Proceeds from Share Capital = |2, 00, 000 Repayment of Bank Loan = |2, 20, 000
Net Cash Flow from Financing Activities = |(2, 00, 000 − 2, 20, 000) = |(20, 000) (Outflow)
04
PYQ 2024
medium
accountancyID: cbse-cla
Which of the following transactions will result in a flow of cash?
1
Cash withdrawn from bank rupee 71,000
2
Issue of 9% debentures of rupee 1,00,000 to the vendors of machinery
3
Received from debtors rupee 74,000
4
Redeemed 10% debentures by converting into equity shares
Official Solution
Correct Option: (3)
Cash withdrawn from the bank does not result in a flow of cash since it is an internal transfer. Issue of debentures to vendors of machinery is a non-cash transaction. Receipt of cash from debtors results in a cash inflow and is thus a flow of cash. Redemption of debentures by converting them into equity shares is also a non-cash transaction.
05
PYQ 2024
medium
accountancyID: cbse-cla
Tax paid during the year ended 31st March, 2023 was rupee 15,000. While calculating Net Profit before Tax and Extraordinary items, the amount of provision for tax to be added is .......
1
rupee 30,000
2
rupee 25,000
3
rupee 10,000
4
rupee 15,000
Official Solution
Correct Option: (1)
1. Given Data: - Provision for tax on 1st April 2022 = rupee 10,000 - Provision for tax on 31st March 2023 = rupee 25,000 - Tax paid during the year = rupee 15,000 2. Formula to Calculate Provision for Tax to be Added: 3. Increase in Provision: 4. Total Provision to be Added: Thus, the amount of provision for tax to be added is rupee 30,000 (Option A).
06
PYQ 2024
easy
accountancyID: cbse-cla
Shyam Sunder Ltd. is a financing company. Under which of the following activity will the amount of ‘Interest paid on loan’ be shown:
1
Investing activity
2
Financing activity
3
Both Financing & Operating activity
4
Operating activity
Official Solution
Correct Option: (4)
1. Interest paid on loans is classified differently for financing and non-financing companies.
2. For a financing company (like Shyam Sunder Ltd.), interest paid on loans is considered an operating expense since earning and paying interest is part of its core business operations.
3. According to AS-3 (Cash Flow Statements), interest paid is classified as: - Operating Activity for financial institutions and banks. - Financing Activity for non-financial firms.
4. Since Shyam Sunder Ltd. is a financing company, the interest paid on loans will be classified under operating activities in the cash flow statement.
Thus, the correct answer is: (D) Operating activity.
07
PYQ 2025
medium
accountancyID: cbse-cla
In case of a non-financial enterprise, payment of dividend is considered as a/an:
1
Operating Activity
2
Investing Activity
3
Financing Activity
4
Both Investing and Financing Activity
Official Solution
Correct Option: (3)
According to AS-3 (Revised) on Cash Flow Statements: Financing Activities include transactions that result in changes in the size and composition of the owner’s capital and borrowings of the enterprise. For a non-financial enterprise, dividend paid to shareholders is classified as a cash outflow under financing activities because it is a distribution of profits to equity holders. This is different from a financial enterprise (like a bank), where interest and dividends may be treated differently. Dividend received = investing activity Dividend paid = financing activity Hence, payment of dividend in a non-financial enterprise is a financing activity.
08
PYQ 2025
medium
accountancyID: cbse-cla
Which of the following transactions will result in outflow of cash?
1
Cash payments to and on behalf of the employees
2
Cash receipts from royalties
3
Issue of shares
4
Dividend received from investments in other enterprises
Official Solution
Correct Option: (1)
Let’s identify the nature of each transaction: (A) Cash payments to employees = cash outflow under operating activities (B) Royalties received = cash inflow (C) Issue of shares = cash inflow from financing activity (D) Dividends received = cash inflow from investing activity Only (A) represents money going out of the business.
09
PYQ 2025
medium
accountancyID: cbse-cla
Cash Flow Statement is prepared in accordance with:
1
Accounting Standard 3
2
Accounting Standard 26
3
The Companies Act, 2013
4
The Companies Act, 1956
Official Solution
Correct Option: (1)
AS-3 deals with the preparation of Cash Flow Statements and categorizes cash flows into Operating, Investing and Financing Activities.
10
PYQ 2025
medium
accountancyID: cbse-cla
Statement I: Snow Ltd. made a net profit of ₹ 5,00,000 after taking into consideration interest on investment of ₹ 1,00,000. Operating profit before working capital changes would be ₹ 4,00,000. Statement II: To calculate operating profit, before working capital changes, interest on investment is subtracted from net profit because it is a non-operating income.
Choose the correct option:
1
Only Statement I is true
2
Only Statement II is true
3
Both the Statements are false
4
Both the Statements are true
Official Solution
Correct Option: (4)
Operating profit excludes non-operating incomes such as interest on investments.
So, Net Profit ₹ 5,00,000 − Interest ₹ 1,00,000 = ₹ 4,00,000 Operating Profit.
Hence, both statements are correct.
11
PYQ 2025
medium
accountancyID: cbse-cla
Short-term highly liquid investments qualify as cash equivalents if they are realisable into known amounts of cash from the date of acquisition within a period of :
1
6 months or less
2
9 months or less
3
12 months or less
4
3 months or less
Official Solution
Correct Option: (4)
Cash equivalents are short-term, highly liquid investments that are:
Easily convertible to known amounts of cash,
Near their maturity (i.e., 3 months or less),
Subject to an insignificant risk of change in value,
Held primarily for meeting short-term cash commitments rather than for investment or other purposes.
Key Condition: For an investment to be classified as a cash equivalent, it must have a maturity period of three months or less from the date of acquisition. This strict time-bound criterion ensures that the investment is not affected by interest rate changes or market volatility, and thus remains nearly as liquid and safe as cash itself. Common Examples:
Treasury bills with original maturity ≤ 3 months,
Commercial papers,
Short-term government bonds,
Bank deposits with ≤ 3 months tenure,
Highly liquid money market funds.
Investments with maturity periods greater than 3 months, even if liquid, do not qualify as cash equivalents under this definition.
12
PYQ 2025
medium
accountancyID: cbse-cla
The following information has been extracted from the books of Ram Lal Ltd.:
Comparative Financial Data as on 31st March, 2024 and 2023
Particulars
31.03.2024 (₹)
31.03.2023 (₹)
Surplus (P&L)
17,00,000
8,00,000
Patents
--
50,000
Sundry Debtors
5,80,000
4,20,000
Sundry Creditors
1,40,000
60,000
Cash and Cash Equivalents
2,00,000
90,000
Additional Information:
Interim dividend paid during the year was \textrupee{ 1,20,000}.
Official Solution
Correct Option: (1)
Cash Flow from Operating Activities (Indirect Method)
Net Profit before Tax and Extraordinary Items: Increase in Surplus (P&L) = ₹17,00,000 − ₹8,00,000 = ₹9,00,000 Add: Interim Dividend Paid = ₹1,20,000 Total Net Profit during the year = ₹9,00,000 + ₹1,20,000 = ₹10,20,000
Increase in Cash and Cash Equivalents = ₹2,00,000 − ₹90,000 = ₹1,10,000 ⇒ Result (not adjustment)
Net Change in Working Capital: Change = (−₹1,60,000) + ₹80,000 = −₹80,000
Net Cash from Operating Activities:
Answer: ₹9,40,000
13
PYQ 2025
easy
accountancyID: cbse-cla
In case of non-financial enterprises, payment of interest and dividends are classified as financing activities, whereas receipt of interest and dividends are classified as investing activities. Investing and financing transactions that require the use of cash or cash equivalents, should be excluded from cash flow statement. Choose the correct alternative from the following:
1
Both the statements are false.
2
Both the statements are true.
3
Statement I is false and Statement II is true.
4
Statement I is true and Statement II is false.
Official Solution
Correct Option: (4)
Statement I is true because according to AS-3 (Revised), for non-financial companies, interest paid and dividends paid are shown under financing activities, and interest/dividends received under investing. Statement II is false because investing and financing activities requiring cash or cash equivalents are included in cash flow statements. Only non-cash transactions are excluded.
14
PYQ 2025
medium
accountancyID: cbse-cla
Calculate 'Cash Flows from Investing Activities' from the given information:
Comparative Statement of Assets
Particulars
31.03.2024 (₹)
31.03.2023 (₹)
10% Long Term Investments
2,50,000
4,50,000
Plant and Machinery
8,00,000
6,00,000
Goodwill
1,40,000
1,00,000
Investment in shares of Pinnacle Ltd.
14,00,000
5,00,000
Patents
-
1,50,000
Official Solution
Correct Option: (1)
Sale of Patents = \₹ 1,50,000 Sale of Machine = \₹ 48,000 Purchase of Plant = 8,00,000 - 6,00,000 + 60,000 - 48,000 = \₹ 2,12,000 Purchase of Pinnacle Shares = \₹ 9,00,000 Purchase of Goodwill = \₹ 40,000 Decrease in 10% LTI = − = +\₹ 2,00,000 Cash Flow from Investing Activities: Inflows: Sale of patents + machine + decrease in LTI = 1,50,000 + 48,000 + 2,00,000 = 3,98,000 Outflows: Purchase of Plant (2,12,000), Pinnacle Shares (9,00,000), Goodwill (40,000) Net = 3,98,000 - (2,12,000 + 9,00,000 + 40,000) = −\₹ 7,54,000
15
PYQ 2025
easy
accountancyID: cbse-cla
From the following information, calculate Cash Flows from Financing Activities :
Particulars
31-03-2024 (₹)
31-03-2023 (₹)
Equity Share Capital
12,00,000
8,00,000
11% Debentures
3,00,000
4,00,000
Securities Premium
1,40,000
1,00,000
Additional Information :
Interest paid on debentures amounted to ₹ 40,000.
From the following information, calculate Cash Flows from Investing Activities :
Particulars
31-03-2024 (₹)
31-03-2023 (₹)
Machinery (at cost)
3,80,000
3,00,000
Accumulated Depreciation
62,000
45,000
Additional Information :
A machine costing ₹ 50,000 on which accumulated depreciation was ₹ 20,000 was sold at a profit of 10%.
Official Solution
Correct Option: (1)
Cost of machinery sold: ₹ 50,000
Less: Accumulated Depreciation ₹ 20,000
Book value = ₹ 30,000
Selling price = ₹ 30,000 + 10% of ₹ 30,000 = ₹ 33,000 Cash outflow for purchase of machinery: Opening machinery balance = ₹ 3,00,000
Add: Purchases – Sales + Closing = ₹ 3,80,000
Purchases = ₹ 3,80,000 – ₹ 3,00,000 + ₹ 50,000
Purchases = ₹ 1,30,000 Net cash flow from investing activities:
Sale proceeds of machinery = ₹ 33,000
Less: Purchase of machinery = ₹ 1,30,000 Net Outflow = ₹ 97,000
17
PYQ 2025
hard
accountancyID: cbse-cla
Statement– I : Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Statement– II : Cash payments to acquire fixed assets including intangibles and capitalised research and development results in cash outflow from investing activities. Choose the correct option from the following :
1
Both the Statements are true
2
Both the Statements are false.
3
Only Statement I is true.
4
Only Statement II is true.
Official Solution
Correct Option: (1)
The correct answer is (A) Both the Statements are true.
Explanation: Investing activities include acquisition or disposal of long-term assets such as property, plant, equipment, intangibles (like patents, goodwill), and long-term investments. Statement II further specifies one type of cash outflow that belongs under investing activities: cash spent on acquiring fixed assets, including intangibles or capitalised R&D costs. Hence, both statements correctly define aspects of investing cash flows.
18
PYQ 2025
medium
accountancyID: cbse-cla
Which of the following statements is incorrect ? Cash payments to suppliers for goods and services.
Dividend received from investments in other enterprises.
Cash receipts from royalties, fees, commissions and other revenues.
Cash repayments of amounts borrowed.
Official Solution
Correct Option: (1)
(B) Dividend received from investments in other enterprises.
Reason: Dividend received is a cash flow from investing activities, not from operating or financing activities — thus making it the incorrect categorization if listed otherwise.
19
PYQ 2025
medium
accountancyID: cbse-cla
Which of the following are operating activities for the purpose of preparing cash flow statement? Cash payments to suppliers for goods and services.
Dividend received from investments in other enterprises.
Cash receipts from royalties, fees, commissions and other revenues.
Cash repayments of amounts borrowed.
1
(i), (ii) and (iii)
2
(i) and (iii)
3
(i), (iii) and (iv)
4
(iii) and (iv)
Official Solution
Correct Option: (2)
The correct answer is (B) (i) and (iii). Explanation: Operating activities include cash flows directly related to revenue generation and day-to-day operations. (i) Cash payments to suppliers – operating activity.
(ii) Dividend received – under AS-3 (Revised), considered investing activity (for non-finance companies).
(iii) Cash receipts from royalties, fees, commissions – operating activity.
(iv) Cash repayments of borrowed amounts – financing activity. Hence, only (i) and (iii) are operating activities.
20
PYQ 2025
medium
accountancyID: cbse-cla
From the following details, calculate Cash Flow from Investing Activities: - Purchase of Machinery Rs 1,50,000
- Sale of Land Rs 80,000
- Purchase of Investments Rs 50,000 - Interest received Rs 8,000
Official Solution
Correct Option: (1)
Cash Flow from Investing Activities: Final Answer:
21
PYQ 2025
medium
accountancyID: cbse-cla
Show the following items under major heads and sub-heads (if any) in the Balance Sheet of the company as per Schedule III, Part I of the Companies Act, 2013: (a) Stock-in-trade (b) Motor Vehicles (c) Provision for tax
Official Solution
Correct Option: (1)
Classification of Items in Balance Sheet
(a) Stock-in-trade
Major Head: Current Assets Sub-head: Inventories
Stock-in-trade refers to goods bought for resale (not raw material or finished goods). It is part of the inventory classification.
(b) Motor Vehicles
Major Head: Non-current Assets Sub-head: Property, Plant and Equipment (PPE)
Motor vehicles used in operations are classified under fixed assets. Depreciation is charged on them.
(c) Provision for Tax
Major Head: Current Liabilities Sub-head: Short-term Provisions
Provisions for tax are payable within one year and hence treated as short-term obligations.
22
PYQ 2025
medium
accountancyID: cbse-cla
From the following information, calculate cash flow from investing and financing activities:
Purchase of Machinery ₹1,60,000
Sale of Machinery ₹40,000
Interest Paid ₹10,000
Dividend Paid ₹15,000
Proceeds from Issue of Shares ₹2,00,000
Proceeds from Long-Term Borrowings ₹50,000
Official Solution
Correct Option: (1)
Cash Flow from Investing ActivitiesCash Flow from Financing Activities Cash Flow from investing involves inflow from sale and outflow from purchase of assets. Financing involves raising capital and repayment outflows like dividends and interest.
23
PYQ 2025
medium
accountancyID: cbse-cla
The activities that result in changes in the size and composition of the owners’ capital and borrowings of the enterprise are called \underline{\hspace{2cm}}.
1
Operating Activities
2
Investing Activities
3
Managerial Activities
4
Financing Activities
Official Solution
Correct Option: (4)
Financing activities are those activities that cause changes in the size and structure of the owner's capital (equity) and borrowings (debt) of a firm. Examples include issue of shares, debentures, raising long-term loans, repayment of loans, and payment of dividends. Such activities help finance the core operations of the business and affect the capital structure. Therefore, any inflow from investors or lenders and any outflow to them (like dividend or repayment) are classified under financing activities. Hence, the correct classification for changes in the owners’ capital and borrowings is Financing Activities.
24
PYQ 2025
medium
accountancyID: cbse-cla
From the following information extracted from the books of Kant Ltd., calculate ‘Cash Flows from Operating Activities’.
Official Solution
Correct Option: (1)
Step 1: Start with Net Profit Net Profit during the year = 1,95,000 Step 2: Add Non-Cash and Non-Operating Expenses Depreciation on Machinery = 50,000 Goodwill written off = 30,000 Loss on Sale of Machinery = 10,000 Transfer to General Reserve = 1,05,000 Total added back = Step 3: Operating Profit before Working Capital Changes Step 4: Adjust for Changes in Working Capital Trade Receivables increased by 2,00,000 Cash Outflow (negative adjustment) Trade Payables decreased by 10,000 Cash Outflow (negative adjustment) Total adjustments = Step 5: Net Cash Flow from Operating Activities Cash Flows from Operating Activities = 1,80,000
25
PYQ 2025
medium
accountancyID: cbse-cla
Statement I: Sale of marketable securities will result in flow of cash. Statement II: Cash flow implies movement of cash in and out due to some non-cash items. Choose the correct option from the following:
1
Both the statements are true.
2
Both the statements are false.
3
Statement I is true, Statement II is false.
4
Statement I is false, Statement II is true.
Official Solution
Correct Option: (3)
Statement I: Sale of marketable securities brings in cash. This is a cash inflow and is True. Statement II: Cash flow refers to actual inflow and outflow of cash. Non-cash items like depreciation do not cause cash movement. Statement II is False. Correct choice is (C) — Statement I is true, Statement II is false.
26
PYQ 2025
medium
accountancyID: cbse-cla
‘Sale of Patents’ will result in:
1
Cash outflows from investing activities
2
Cash inflows from investing activities
3
Cash inflows from financing activities
4
Cash inflows from operating activities
Official Solution
Correct Option: (2)
Step 1: Patents are intangible fixed assets. Their sale generates cash, which is classified under investing activities. Step 2: Let’s evaluate each option: (A) Cash outflows from investing activities This would be the case if patents were purchased, not sold. Incorrect. (B) Cash inflows from investing activities Selling patents brings in cash from fixed asset disposal. Correct. (C) Cash inflows from financing activities Financing involves shares and borrowings, not assets. Incorrect. (D) Cash inflows from operating activities Operating activities relate to core operations, not sale of assets. Incorrect. Correct answer is (B) — Cash inflows from investing activities.
27
PYQ 2025
medium
accountancyID: cbse-cla
Which of the following transactions will result in ‘Cash Flows from Operating Activities’?
1
Purchase of Inventory
2
Payment of Dividend
3
Purchase of Property
4
Issue of Debentures
Official Solution
Correct Option: (1)
Step 1: Operating Activities are related to the primary revenue-generating operations of the company. Step 2: Let's analyse each option: (A) Purchase of Inventory This is a regular business activity involving the use of cash for buying stock. Falls under Operating Activities. (B) Payment of Dividend This is a return given to shareholders. Falls under Financing Activities. (C) Purchase of Property Involves acquiring long-term fixed assets. Falls under Investing Activities. (D) Issue of Debentures It involves raising funds from the public or institutions. Falls under Financing Activities. Only Option (A) results in cash flow from operating activities.
28
PYQ 2025
medium
accountancyID: cbse-cla
The current ratio of Jack Ltd. is 3.2 : 1 and the quick ratio is 1.5 : 1. The excess of current assets over quick assets was represented by inventories which were Rs. 68,000. Calculate:
[(i)] Current Assets [(ii)] Quick Assets [(iii)] Current Liabilities
Official Solution
Correct Option: (1)
Let current liabilities be Rs. . Then, according to the current ratio:
And from the quick ratio:
We are given:
Now we calculate each required value:
(i) Current Assets:
(ii) Quick Assets:
(iii) Current Liabilities:
Final Answer:
29
PYQ 2025
medium
accountancyID: cbse-cla
The following information has been extracted from the books of Lata Ltd.: \begin{tabular}{|l|r|r|}
\hline
Particulars & 31.3.2024 (Rs.) & 31.3.2023 (Rs.)
\hline
Machinery (Cost) & 70,00,000 & 50,00,000
Accumulated Depreciation & 10,00,000 & 8,00,000
\hline
\end{tabular} \vspace{0.25cm} Additional Information:
(i) During the year, a piece of machinery costing Rs. 1,40,000 on which accumulated depreciation was Rs. 90,000, was sold at a gain of Rs. 10,000.
(ii) Depreciation charged during the year amounted to Rs. 2,90,000. Calculate: Cash Flows from Investing Activities
Official Solution
Correct Option: (1)
Step 1: Calculate Sale Value of Machinery Sold Cost of machinery sold = Rs. 1,40,000 Less: Accumulated Depreciation = Rs. 90,000 Book Value = Rs. 50,000 Gain on sale = Rs. 10,000 Sale Price = Rs. 50,000 + Rs. 10,000 = Rs. 60,000
Step 2: Calculate Purchase of Machinery Let machinery purchased = Rs. Opening Gross Block = Rs. 50,00,000 Less: Cost of machinery sold = Rs. 1,40,000 Add: Purchases = Closing Gross Block = Rs. 70,00,000
Step 3: Calculate Cash Flow from Investing Activities Outflow: Purchase of Machinery = Rs. 21,40,000 Inflow: Sale of Machinery = Rs. 60,000
Final Answer:
30
PYQ 2025
hard
accountancyID: cbse-cla
From the following Balance Sheet of Bose Ltd. as at 31st March, 2024, calculate ‘Cash Flows from Operating Activities’.
Official Solution
Correct Option: (1)
Operating Ratio Calculation
Step 1: Calculate Cost of Goods Sold (COGS) COGS = Purchases + Carriage Inward – Increase in Inventory = ₹12,00,000 + ₹20,000 – ₹50,000 = ₹11,70,000
Step 4: Calculate Operating Ratio Operating Ratio = (Operating Cost / Revenue from Operations) × 100 = (₹14,00,000 / ₹25,00,000) × 100 = 56%
Cash Flow from Operating Activities (Indirect Method)
Step 1: Start with Net Profit before Tax Change in Statement of Profit and Loss = Closing – Opening = ₹5,00,000 – ₹12,00,000 = (₹7,00,000) (Net Loss)
Add: Non-cash and Non-operating Expenses Depreciation = ₹5,00,000 – ₹3,00,000 = ₹2,00,000 Loss on sale of machinery = ₹70,000 Total Adjustments = ₹2,00,000 + ₹70,000 = ₹2,70,000
Adjusted Operating Loss before Working Capital Changes = (₹7,00,000) + ₹2,70,000 = (₹4,30,000)
Step 2: Adjust for Changes in Working Capital Inventories: No change = ₹0 Trade Receivables: ₹10,00,000 – ₹2,00,000 = ₹8,00,000 (Increase) ⇒ Decrease in cash Trade Payables: ₹5,00,000 – ₹3,50,000 = ₹1,50,000 (Increase) ⇒ Increase in cash Net change in working capital = –₹8,00,000 + ₹1,50,000 = –₹6,50,000
Cash used in Operating Activities = (₹4,30,000) – ₹6,50,000 = –₹10,80,000
Final Answer: Net Cash used in Operating Activities = –₹10,80,000
31
PYQ 2026
easy
accountancyID: cbse-cla
From the following information obtained from the books of 'Ajanta Ltd.', calculate Cash from Operations:Net Profit for the year ended 31st March, 2025 after charging depreciation of ₹ 80,000 and after writing off goodwill ₹ 10,500 was ₹ 4,90,000.Additional Information:
Official Solution
Correct Option: (1)
Calculation of Cash from Operations
For the Year Ended 31st March, 2025
Particulars
Amount (₹)
Total (₹)
Net Profit for the year
4,90,000
Add: Non-operating items charged to P&L
Depreciation
80,000
Goodwill written off
10,500
90,500
Operating Profit before Working Capital Changes
5,80,500
Add: Decrease in Current Assets
Prepaid Insurance (20,000 − 15,000)
5,000
Accrued Interest (40,000 − 30,000)
10,000
15,000
Add: Increase in Current Liabilities
Rent received in advance (10,000 − 0)
10,000
10,000
Less: Increase in Current Assets
Inventories (1,50,000 − 1,00,000)
(50,000)
Trade Receivables (2,25,000 − 2,00,000)
(25,000)
Other Current Assets (1,40,000 − 90,000)
(50,000)
(1,25,000)
Less: Decrease in Current Liabilities
Trade Payables (2,00,000 − 1,70,000)
(30,000)
Outstanding Expenses (12,000 − 8,500)
(3,500)
(33,500)
Cash from Operations
4,47,000
Working Notes
Rules for Adjustments
For Current Assets:
Increase → Deduct (Decrease in Cash)
Decrease → Add (Increase in Cash)
For Current Liabilities:
Increase → Add (Increase in Cash)
Decrease → Deduct (Decrease in Cash)
Summary of Adjustments
Item
Nature
Treatment
Inventories (Increase)
Current Asset
Deduct
Trade Receivables (Increase)
Current Asset
Deduct
Prepaid Insurance (Decrease)
Current Asset
Add
Accrued Interest (Decrease)
Current Asset
Add
Other Current Assets (Increase)
Current Asset
Deduct
Trade Payables (Decrease)
Current Liability
Deduct
Outstanding Expenses (Decrease)
Current Liability
Deduct
Rent Received in Advance (Increase)
Current Liability
Add
32
PYQ 2026
medium
accountancyID: cbse-cla
Statement I: In case of non-financial enterprises, payment of interest and dividend are classified as financing activities.Statement II: In case of financial enterprises, payment of interest and dividend are classified as investing activities.Choose the correct option from the following:
1
Both the statements are true.
2
Both the statements are false.
3
Statement I is true, but Statement II is false.
4
Statement I is false, but Statement II is true.
Official Solution
Correct Option: (3)
We need to evaluate the two statements regarding classification of interest and dividend payments in Cash Flow Statement for different types of enterprises. Step 1: Recall the classification as per Accounting Standard-3 (AS-3). AS-3 on Cash Flow Statement provides guidance on classification of cash flows:
For non-financial enterprises:
Interest paid is usually classified as financing activity
Dividend paid is classified as financing activity
Interest and dividend received are classified as investing activities
For financial enterprises:
Interest paid and received, and dividend paid and received are usually classified as operating activities because these are part of their principal revenue-generating activities.
Financial enterprises (banks, insurance companies, etc.) deal in financial instruments, so interest and dividends are their core business activities.
Step 2: Analyze Statement I. \textit{"In case of non-financial enterprises, payment of interest and dividend are classified as financing activities."} This is true. For non-financial companies, interest paid on borrowings and dividend paid to shareholders are both financing outflows. Step 3: Analyze Statement II. \textit{"In case of financial enterprises, payment of interest and dividend are classified as investing activities."} This is false. For financial enterprises:
Payment of interest is an operating activity (since interest expense is part of their main business)
Payment of dividend is still a financing activity (dividend is distribution to shareholders, not part of operations)
Even if we consider both, they are not classified as investing activities. Investing activities relate to acquisition and disposal of long-term assets and investments. Step 4: Conclusion. Statement I is true, Statement II is false. This matches option (C). Final Answer: (C) Statement I is true, but Statement II is false.
33
PYQ 2026
medium
accountancyID: cbse-cla
When an arithmetic expression or function is executed, the value produced is known as:
1
Horizontal value
2
Vertical value
3
Derived value
4
Basic value
Official Solution
Correct Option: (3)
Concept: Spreadsheet Terminology In spreadsheet applications:
• A value obtained after applying formulas or functions is called a derived value. Explanation: • Horizontal/Vertical values are not technical terms. • Basic value refers to original data input. • Derived value refers to computed output from formulas. Therefore, the correct answer is:
