Accountancy

SOLUTION Cash Flows mean the inflows and outflows of cash and cash equivalents.

SOLUTION It ignores non cash transactions such as issue of shares against purchase of fixed assets or conversion of debentures into shares.

SOLUTION  (i) Useful in preparing the Cash Budget.(ii) It explains deviations of Cash form earnings.

SOLUTION (i) To provide information regarding source and uses of cash from operating investing and financing activities separately. (ii) To highlight change in cash position.

SOLUTION Under Accounting Standard-3 (Revised).

SOLUTION It is Statement of inflow (Source) and outflows (uses) of cash and cash equivalents during a particular period of time.

SOLUTION Issue of bonus shares will not change the Debt- equity ratio because reserves are converted into share capital.

SOLUTION Purchase of goods will not change the operating ratio.

SOLUTION Operating Profit Ratio = 100 - Operating RatioOperating Profit Ratio = 100 - 88.94 = 11.06%.