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CA Final · Financial Reporting · Ind AS 7 Statement of Cash Flows

Ravi Pharma Ltd, a non-financial entity, has these figures for the year. Dividend declared Rs 4,00,000, of which Rs 3,20,000 was actually paid. Interest expense Rs 1,50,000, of which Rs 1,20,000 was paid. Interest income received Rs 60,000. Dividend income received Rs 30,000. What amount of cash outflow arising from dividends and interest paid is shown under financing activities, and what is the net inflow under investing activities from the income received?

Financing outflow is Rs 4,40,000, being dividend actually paid of Rs 3,20,000 plus interest actually paid of Rs 1,20,000. Investing inflow is Rs 90,000 from interest and dividends received. Declared dividend and accrued interest are not cash flows and are excluded.

  1. AFinancing outflow Rs 5,50,000; investing inflow Rs 90,000
  2. BFinancing outflow Rs 4,40,000; investing inflow Rs 90,000Correct
  3. CFinancing outflow Rs 3,50,000; investing inflow Rs 90,000
  4. DFinancing outflow Rs 4,70,000; investing inflow Rs 30,000

Explanation

Only cash flows count. Dividend paid is Rs 3,20,000 and interest paid is Rs 1,20,000, so the financing outflow is Rs 4,40,000. Interest and dividends received (Rs 60,000 + Rs 30,000) give an investing inflow of Rs 90,000. Rs 5,50,000 uses the declared and accrued amounts instead of the amounts paid, and Rs 3,50,000 wrongly nets the receipts against the financing payments.

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