Cash Flow Statement

In case the additional information is given in the question then we need to prepare the accounts of relevant items to extract the hidden information. If additional information regarding provision for tax is given, then an account is prepared for calculating the amount of taxes paid during the year or provision for taxation made during the year. Provision for taxation account is prepared like any other liability account. Proposed Dividend appearing in the previous year’s Balance Sheet must have been paid during the year and is shown as outflow in cash flow from financing activities. The current year’s figure will be added back to net profits and will appear in the head cash flow from operating activities. In case of additional information regarding fixed assets, a fixed assets account is prepared to compute amount of sale proceeds, amount of purchases, profit/ loss on sale or depreciation charged. Accumulated Depreciation account is prepared separately for information regarding fixed assets. Share capital account is prepared to compute cash received from fresh issue of equity shares, premium on issue or buy back of shares. It is prepared like any other liability account. Long term loan account or debentures account is prepared to compute increase or decrease in non current liability.

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