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CA Intermediate · Advanced Accounting · Financial Statements of Companies

Ganga Ltd. has the following current assets on 31 March 2026: raw materials Rs 6,00,000; finished goods Rs 9,00,000; trade receivables outstanding for less than 6 months Rs 12,00,000; cash in hand Rs 1,00,000; balance in current account with bank Rs 4,00,000; fixed deposit with bank maturing in 8 months Rs 5,00,000 (original maturity 2 years). Under Schedule III, what amount is shown as 'Cash and cash equivalents'?

Cash and cash equivalents are Rs 5,00,000, made up of cash in hand and the current account balance. The fixed deposit is shown separately as other bank balances because its original maturity was two years, and inventories and receivables are not cash items.

  1. ARs 5,00,000Correct
  2. BRs 10,00,000
  3. CRs 1,00,000
  4. DRs 17,00,000

Explanation

Cash and cash equivalents include cash in hand and bank balances in current accounts: 1,00,000 + 4,00,000 = Rs 5,00,000. The fixed deposit had an original maturity of 2 years, so it is shown as other bank balances, not cash equivalents. Rs 10,00,000 wrongly includes it.

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