Question

From the following summary of Cash Account of Kedia Ltd. prepare Cash Flow Statement for the year ended 31st March, 2025 using the direct method:

Receipts	Amount (Rs.)	Payments	Amount (Rs.)
Balance on 31st March, 2024	5,000	Payments to suppliers	50,000
Issue of equity shares	10,000	Purchase of fixed assets	60,000
Receipts from customers	1,50,000	Overhead expenses	3,000
Sale of fixed assets	33,000	Wages and salaries	15,000
		Taxation	10,000
		Dividend	5,000
		Payment of bank loan	35,000
		Balance on 31st March, 2025	20,000
Total	1,98,000	Total	1,98,000

Hint:

Classify items into Operating/Investing/Financing; the three net totals must reconcile opening to closing cash balance.

Answer 1

Step 1: Start from the answer and work backward as a verification-first approach:
The closing balance (Rs. 20,000) minus the opening balance (Rs. 5,000) must equal the net change in cash for the year, i.e. Rs. 15,000 — so whatever the three activities sum to, they must net to exactly this figure.

Step 2: Bucket every line item into its activity, and total each bucket independently:
Operating bucket: +1,50,000 (customers) −50,000 (suppliers) −3,000 (overheads) −15,000 (wages) −10,000 (tax) = +72,000.
Investing bucket: +33,000 (asset sale) −60,000 (asset purchase) = −27,000.
Financing bucket: +10,000 (shares) −35,000 (loan repayment) −5,000 (dividend) = −30,000.

Step 3: Sum the three buckets and confirm it matches the expected change from Step 1:
72,000 − 27,000 − 30,000 = 15,000, which exactly equals the Rs. 15,000 change required — confirming every item was classified and totalled correctly.

Final Answer:
Operating: Rs. 72,000 net inflow; Investing: Rs. 27,000 net outflow; Financing: Rs. 30,000 net outflow; combined net change = \[ \boxed{Rs.\ 15{,}000} \] increase, taking cash from Rs. 5,000 to Rs. 20,000, matching the given closing balance exactly.