Skip to content

CA Intermediate · Advanced Accounting · AS 3 Cash Flow Statement

Yamuna Foods Ltd. holds Rs 2,00,000 in current account, Rs 3,00,000 in a 60-day deposit with a bank, a Rs 1,50,000 investment in a 5-year bank deposit, and treasury bills of Rs 1,00,000 purchased two months before the year end with 3 months maturity from purchase. Cash and cash equivalents as per AS 3 amount to:

Cash and cash equivalents are Rs 6,00,000. This includes the current account balance, the 60-day deposit and the treasury bills, since each had an original maturity of three months or less. The five-year bank deposit is excluded because its original maturity is far beyond three months.

  1. ARs 6,00,000Correct
  2. BRs 7,50,000
  3. CRs 5,00,000
  4. DRs 3,00,000

Explanation

Cash equivalents are short-term, highly liquid investments with original maturity of three months or less. Current account 2,00,000 + 60-day deposit 3,00,000 + treasury bills 1,00,000 (original maturity 3 months) = 6,00,000. The 5-year deposit is excluded because its original maturity is long.

Did you get it right without looking?

One question tells you little. A timed set on AS 3 Cash Flow Statement shows your real accuracy, how long you take and where you lose marks.

Practise AS 3 Cash Flow StatementFree diagnostic mock

More AS 3 Cash Flow Statement questions