Class 12th Accountancy 2017 Set1 Delhi Board Paper Solution
Net increase in working capital other than cash and cash equivalents will increase, decrease or not change cash flow from operating activities. Give reason in support of your answer.
The formula of working capital = Current assets - Current liability
Net increase in working capital denotes that inflow (decrease in current assets and increase in current liability) is more than outflow (increase in current assets and decrease in current liability).
So the impact would be the net increase in cash flow from operating activity.
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Raju and Jai commenced business in partnership on April 1, 2017. No partnership agreement was made whether oral or written. They contributed Rs. 4,00,000 and Rs. 1,00,000 respectively as capitals. In addtion, Raju advanced Rs. 2,00,000 as loan to the firm on October 1, 2017. Raju met with an accident on July 1, 2017 and could not attend the business up to september 30, 2017. The profit for the year ended March 31, 2018 amounted to Rs, 50,600. Disputes have arisen between them on sharing the profits of the firm.
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