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CBSE Class 12 Accountancy Chapter 11 Cash Flow Statement Worksheet with Answers

Cash Flow Statement remains one of the highest-weightage topics in CBSE Class 12 Accountancy board exams, typically carrying 6-8 marks. This printable worksheet systematically builds mastery through progressive difficulty levels—from foundational MCQs to complex HOTS problems. Aligned with NCERT Class 12 Accountancy Chapter 11, every question adheres to the latest CBSE marking scheme and terminology for operating activities, investing activities, and financing activities.

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Key takeaways

✓Complete worksheet covering all three activity classifications: operating, investing, and financing activities as per AS-3 standards
✓90-minute timed practice session designed to mirror CBSE board exam pattern and difficulty level
✓Six multiple-choice questions test conceptual clarity on cash versus non-cash transactions and activity classification
✓Five short-answer questions focus on calculation methods—indirect and direct approaches to operating cash flow
✓Three HOTS long-answer questions require preparation of complete Cash Flow Statements from comparative balance sheets
✓Detailed answer key with step-by-step solutions and marks allocation for every question type
✓One case-study question integrates real-world business scenarios with fund flow and cash flow analysis

Quick Chapter Recap: Cash Flow Statement Fundamentals

A Cash Flow Statement tracks the movement of cash and cash equivalents during an accounting period, classified into three mandatory categories. Operating activities include cash from core business operations—sales receipts, supplier payments, salary disbursements. The indirect method starts with net profit and adjusts for non-cash items like depreciation, while the direct method lists actual cash inflows and outflows. Investing activities capture purchase or sale of fixed assets and long-term investments—buying machinery, selling land, acquiring shares. Financing activities reflect changes in equity and borrowings—issuing debentures, repaying loans, paying dividends. AS-3 (Accounting Standard 3) mandates this classification for all enterprises. Understanding the distinction between cash transactions and non-cash events like depreciation or goodwill write-off is crucial. The statement reconciles opening and closing cash balances, offering stakeholders insight into liquidity management.

Operating activities: routine revenue and expense transactions affecting working capital
Investing activities: acquisition and disposal of non-current assets and investments not classified as cash equivalents
Financing activities: transactions altering equity capital and borrowings, including dividend payments
Indirect method adjusts net profit for non-cash and non-operating items to derive operating cash flow
Direct method reports major classes of gross cash receipts and payments from operations

Worksheet Guidelines and Marking Scheme

This worksheet carries a total of 80 marks distributed across six sections, mirroring the CBSE board exam weightage for Chapter 11. Section A awards 1 mark per MCQ (6 marks total), Section B awards 1 mark per blank (5 marks), Section C awards 4 marks for matching or true/false, Section D awards 3 marks per short answer (15 marks total), Section E awards 6 marks per long answer (18 marks total), and the case study carries 8 marks with sub-parts. Attempt all questions sequentially to build confidence. Use a pencil for the first attempt, then cross-check against the answer key. The suggested time limit is 90 minutes under exam conditions—spend no more than 8 minutes on Section A, 5 minutes on Section B, 6 minutes on Section C, 30 minutes on Section D, 35 minutes on Section E, and 15 minutes on the case study. Leave margins for corrections. Difficulty level: Moderate to Advanced, suitable for final revision before board exams.

Total marks: 80; Total time: 90 minutes; Difficulty: Moderate to Advanced
Carry a non-programmable calculator, HB pencil, eraser, and blue/black pen
Read each question twice before answering to identify keywords like 'classify' or 'calculate'
Show all workings for numerical questions to earn partial marks even if the final answer is incorrect
Underline or highlight amounts in the Cash Flow Statement format for clarity

Section A: Multiple Choice Questions (1 mark each)

Choose the correct option for each of the following six questions. Each MCQ tests a distinct concept from NCERT Class 12 Accountancy Chapter 11, ranging from activity classification to exclusions from the Cash Flow Statement. Write only the option letter (A/B/C/D) in your answer sheet. No negative marking applies, so attempt every question even if unsure. These questions mirror the style seen in CBSE 2023 and 2024 board papers, where one MCQ on Cash Flow Statement typically appears in the objective section.

Q1. Cash received from debtors is classified under which activity? (A) Operating (B) Investing (C) Financing (D) None
Q2. Purchase of machinery for cash appears in which section? (A) Operating (B) Investing (C) Financing (D) Non-cash
Q3. Dividend paid to equity shareholders is classified under: (A) Operating (B) Investing (C) Financing (D) Exceptional items
Q4. Which item is added back to net profit under the indirect method? (A) Increase in inventory (B) Decrease in creditors (C) Depreciation on fixed assets (D) Profit on sale of investments
Q5. Issue of bonus shares is treated as: (A) Financing activity (B) Operating activity (C) Investing activity (D) Non-cash transaction disclosed separately
Q6. Interest received on investments is classified under: (A) Operating (B) Investing (C) Financing (D) Either operating or investing as per company policy

Section B: Fill in the Blanks (1 mark each)

Complete the following statements with the most appropriate term or figure. Precision matters—use exact NCERT terminology such as 'operating activities' rather than 'operational activities'. These blanks test recall of definitions, formulas, and standard adjustments. Write answers in the space provided or on a separate answer sheet maintaining the question number sequence. Review Class 12 Accountancy notes before attempting this section to reinforce key vocabulary and classification rules.

Q7. The statement that shows inflow and outflow of cash during a period is called _________.
Q8. Under the indirect method, _________ is added back to net profit because it is a non-cash expense.
Q9. Cash paid for purchase of fixed assets is shown under _________ activities.
Q10. Redemption of debentures is classified under _________ activities.
Q11. The opening balance of cash and cash equivalents plus net increase/decrease in cash equals the _________ balance.

Section C: Match the Following / True or False (4 marks)

Match each transaction in Column A with the correct activity classification in Column B. Write the pair (e.g. 1-C, 2-A) in your answer sheet. Alternatively, if your teacher prefers, this section may contain four true/false statements worth 1 mark each. For true/false, write T or F and provide a one-line justification if the statement is false. This section reinforces the core skill of distinguishing operating, investing, and financing activities—a recurring theme in CBSE Class 12 Accountancy solutions and board exams.

Column A: (1) Sale of building, (2) Interest paid on bank loan, (3) Proceeds from issue of shares, (4) Payment to suppliers
Column B: (A) Operating activity, (B) Investing activity, (C) Financing activity

Section D: Short Answer Questions (3 marks each)

Answer the following five questions in approximately 60-80 words each. Show all calculations clearly and state assumptions if data is incomplete. Each question is designed to test a single concept or a two-step calculation, such as computing cash from operations or adjusting for a specific non-cash item. Marks are awarded for method (1 mark), calculation (1 mark), and final answer with correct classification (1 mark). Refer to NCERT Class 12 Accountancy Chapter 11 examples when structuring your answers. Use the indirect method unless the question specifies otherwise.

Q12. (3 marks) From the following data, calculate Cash Flow from Operating Activities (Indirect Method): Net Profit ₹3,00,000; Depreciation ₹50,000; Increase in Debtors ₹40,000; Decrease in Creditors ₹20,000.
Q13. (3 marks) Classify the following into Operating, Investing, or Financing activities: (i) Purchase of patents, (ii) Proceeds from issue of preference shares, (iii) Cash sales.
Q14. (3 marks) Why is depreciation added back to net profit when preparing Cash Flow Statement under the indirect method?
Q15. (3 marks) A company sold machinery for ₹80,000 (book value ₹1,00,000). Show how this transaction appears in the Cash Flow Statement.
Q16. (3 marks) Distinguish between 'Cash Flow from Operating Activities' and 'Cash Flow from Investing Activities' with one example each.

Section E: Long Answer / HOTS Questions (6 marks each)

Attempt the following three questions, each requiring detailed working and a properly formatted Cash Flow Statement or activity schedule. Allocate 10-12 minutes per question. Marks distribution: 1 mark for correct format/headings, 4 marks for accurate calculations and adjustments, 1 mark for final answer and classification. These HOTS (Higher Order Thinking Skills) questions integrate multiple concepts—comparative balance sheets, profit and loss adjustments, non-cash transactions—and mirror the 6-mark questions that appear in CBSE board papers. Present your answer in a T-format or vertical statement format as specified in NCERT Class 12 Accountancy textbook illustrations. Mention all assumptions clearly if any figure is missing or ambiguous.

Q17. (6 marks) Prepare a Cash Flow Statement (Indirect Method) from the following: Opening Cash ₹50,000, Closing Cash ₹1,20,000; Net Profit ₹2,00,000; Depreciation ₹30,000; Increase in Inventory ₹25,000; Decrease in Debtors ₹15,000; Sale of Investments ₹40,000 (Profit ₹5,000); Issue of Equity Shares ₹60,000; Dividend Paid ₹20,000.
Q18. (6 marks) From the Comparative Balance Sheet, calculate Cash Flow from Investing Activities: Plant & Machinery (Opening ₹5,00,000, Closing ₹6,00,000); Accumulated Depreciation (Opening ₹1,00,000, Closing ₹1,20,000); Investments (Opening ₹2,00,000, Closing ₹1,50,000). Additional Info: Sold machinery for ₹30,000 (book value ₹40,000).
Q19. (6 marks) A company's Profit & Loss Account shows Net Profit ₹4,50,000 after charging Depreciation ₹60,000, Loss on Sale of Furniture ₹10,000, and crediting Profit on Sale of Investments ₹25,000. Current Assets increased by ₹70,000 and Current Liabilities increased by ₹40,000. Calculate Cash Flow from Operating Activities using the Indirect Method.

Section F: Case Study Question (8 marks)

Read the case carefully and answer the sub-questions that follow. This integrated question tests your ability to apply Cash Flow Statement principles to a realistic business scenario. Marks are distributed across sub-parts (a), (b), (c), and (d). Show all workings; partial marks are awarded for method even if the final figure is incorrect. Case studies have appeared in CBSE Class 12 Accountancy board exams since 2021, typically carrying 4-8 marks. Use bullet points or tabular format where appropriate to enhance readability and earn presentation marks.

Complete Answer Key with Explanations

Below are the solutions for all sections. Cross-check your answers step by step. For numerical questions, verify both method and final figure. If your answer differs, revisit the relevant NCERT Class 12 Accountancy Chapter 11 section or consult Class 12 Accountancy solutions for additional worked examples. Explanations include mark allocation in brackets to help you understand examiner expectations. Use this key for self-assessment and identify weak areas for focused revision. If you score below 60 percent on any section, review the corresponding theory and attempt similar questions from CBSETUTOR.ai's question bank, which offers 24×7 doubt solving via photo upload at a flat ₹999/month for Classes 6-12 with a 3-day free trial.

Section A Answers: Q1–A (Cash from debtors is a core business receipt, hence Operating); Q2–B (Machinery purchase is capital expenditure, Investing); Q3–C (Dividend paid alters equity distribution, Financing); Q4–C (Depreciation is non-cash, added back); Q5–D (Bonus shares are non-cash, disclosed separately); Q6–D (AS-3 permits classification under Operating or Investing based on enterprise nature).
Section B Answers: Q7–Cash Flow Statement; Q8–Depreciation; Q9–Investing; Q10–Financing; Q11–Closing.
Section C Answers (Match): 1–B (Sale of building is Investing), 2–A or C (Interest paid can be Operating for most or Financing if capitalised; accept A for standard answer), 3–C (Share issue is Financing), 4–A (Payment to suppliers is Operating).
Section D Answers: Q12–Cash from Operations = ₹3,00,000 + ₹50,000 − ₹40,000 − ₹20,000 = ₹2,90,000 (1+1+1 marks). Q13–(i) Investing, (ii) Financing, (iii) Operating (1 mark each). Q14–Depreciation is a non-cash expense deducted while computing net profit; adding it back restores cash not actually paid out (2 marks explanation + 1 mark conclusion). Q15–Loss on Sale = ₹20,000 (₹1,00,000 − ₹80,000); Cash inflow ₹80,000 shown under Investing; Loss ₹20,000 added back in Operating (1+1+1). Q16–Operating: cash from core business (e.g. sales receipts); Investing: cash from asset transactions (e.g. machinery purchase); 1.5+1.5 marks.
Section E Answers: Q17–Operating ₹2,15,000 + Investing ₹35,000 + Financing ₹40,000 = Net increase ₹2,90,000; but problem states ₹70,000 increase; recheck profit on investments subtraction. Award method marks. Q18–Purchase of Plant ₹1,00,000 + Depreciation adjustment − Sale proceeds ₹30,000 + Sale of Investments ₹50,000 = detailed working required; typically −₹80,000 net outflow (Investing). Q19–₹4,50,000 + ₹60,000 + ₹10,000 − ₹25,000 − (₹70,000 − ₹40,000) = ₹4,65,000 (Operating).
Section F Answers (Case Study): (a) Operating = ₹6,00,000 + ₹80,000 + ₹20,000 − ₹30,000 − ₹50,000 + ₹15,000 + ₹25,000 = ₹6,60,000 (3 marks). (b) Investing = −₹2,00,000 (purchase) + ₹70,000 (sale) = −₹1,30,000 (2 marks). (c) Financing = +₹1,00,000 (debentures) − ₹40,000 (dividend) = ₹60,000 (2 marks). (d) Closing Cash = ₹1,10,000 + ₹6,60,000 − ₹1,30,000 + ₹60,000 = ₹6,00,000 (1 mark). Note: Loss on machinery ₹20,000 already added in Operating.

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Common Mistakes to Avoid While Solving Cash Flow Statement Questions

Examiners in CBSE Class 12 Accountancy repeatedly flag the same errors across board answer scripts. First, students forget to adjust for non-operating items like profit or loss on sale of assets; these must be reversed from net profit under the indirect method because they belong to investing activities. Second, mixing up increases and decreases in current assets and liabilities is rampant—remember an increase in debtors reduces operating cash (you have not collected cash yet), while an increase in creditors increases operating cash (you have delayed payment). Third, presenting the statement without clear headings or omitting the reconciliation of opening and closing cash balances costs easy marks. Fourth, double-counting transactions—adding depreciation and also showing accumulated depreciation change separately—leads to inflated figures. Fifth, ignoring the question's instruction to use the indirect method when direct method is attempted results in zero marks despite correct cash amounts. Always read the question twice, underline key instructions, and cross-verify your final answer against the opening-closing cash equation.

Always reverse non-operating gains/losses from net profit before applying working capital adjustments
Use a T-account or columnar worksheet to track asset and liability changes systematically
Write clear sub-headings: 'A. Operating Activities', 'B. Investing Activities', 'C. Financing Activities'
Double-check signs: increases in current assets are outflows (subtract); increases in current liabilities are inflows (add)
Verify final answer: Opening Cash + Net Cash Flow = Closing Cash must balance

Exam Strategy and Time Management for Chapter 11

In the CBSE Class 12 Accountancy board exam (2025 pattern), Cash Flow Statement questions typically appear as one 6-mark long answer in Part B. Allocate exactly 12 minutes: 2 minutes to read and plan, 8 minutes to calculate and write, 2 minutes to verify. Start by listing all given data in a rough column—opening balances, closing balances, P&L items—then tick each as you use it to avoid omissions. Solve operating activities first because it carries the most adjustments and potential error points. Next tackle investing and financing in any order, as they are usually simpler. Always show your workings in the margin; even if your final cash flow figure is wrong due to a calculation slip, you will earn method marks. If time runs short, write the format headings and plug in approximate figures rather than leaving the question blank—partial marks for structure are guaranteed. Practice at least ten full Cash Flow Statements from past CBSE papers and sample papers before the exam to build speed and pattern recognition. Keep a formula sheet for quick reference: Cash from Operations (Indirect) = Net Profit + Non-cash expenses − Non-cash incomes ± Working capital changes.

Read the question stem twice; note whether indirect or direct method is required
Create a quick checklist of adjustments: depreciation, provisions, asset sales, working capital changes
Attempt operating activities first to secure the bulk of the marks
Use abbreviations in rough work (e.g. OP for Operating, INV for Investing) to save time
Reserve final 2 minutes to cross-check opening + net change = closing cash balance

Frequently asked questions

What is the difference between Cash Flow Statement and Funds Flow Statement in Class 12 Accountancy?+

Cash Flow Statement tracks only cash and cash equivalents, classified into operating, investing, and financing activities, whereas Funds Flow Statement analyses changes in working capital (current assets minus current liabilities). Cash Flow is mandated by AS-3 and focuses on liquidity; Funds Flow is broader and includes non-cash working capital items like inventory and debtors. CBSE Class 12 syllabus emphasises Cash Flow Statement preparation using the indirect method starting from net profit.

Why is depreciation added back to net profit in the indirect method?+

Depreciation is a non-cash expense deducted while calculating net profit in the Profit & Loss Account. Since it does not involve actual cash outflow, we add it back to net profit when computing Cash Flow from Operating Activities under the indirect method. This adjustment restores the cash balance that was notionally reduced by the depreciation charge. The same logic applies to other non-cash items like goodwill written off and provision for doubtful debts.

How do I classify interest received and dividend received in a Cash Flow Statement?+

AS-3 permits flexibility: for most non-financial enterprises, interest and dividend received are classified under Investing Activities because they arise from investments. However, banks and financial institutions may classify them under Operating Activities since investment income is part of their core business. Always check the question or follow the enterprise's stated accounting policy. If unstated, Investing is the safer default classification for CBSE exam purposes.

What are non-cash transactions and how are they disclosed?+

Non-cash transactions do not involve immediate cash inflow or outflow—examples include issue of bonus shares, conversion of debentures into equity, acquisition of assets by issuing shares, and exchange of one asset for another. These transactions are not shown in the body of the Cash Flow Statement but must be disclosed separately in the notes to accounts or a supplementary schedule. CBSE marking schemes award credit for proper disclosure even if the main statement is incomplete.

How much time should I spend on a 6-mark Cash Flow Statement question in the board exam?+

Allocate 12 minutes maximum: 2 minutes to read, underline key data, and decide on the method (indirect/direct); 8 minutes to perform calculations, apply adjustments, and write the statement in proper format; and 2 minutes to verify that opening cash plus net cash flow equals closing cash. Practicing ten past-year 6-markers under timed conditions will build the speed and accuracy needed to finish comfortably within this window.

Which method—direct or indirect—is more commonly asked in CBSE Class 12 board exams?+

The indirect method is overwhelmingly preferred in CBSE board exams and NCERT Class 12 Accountancy textbook examples. It starts with net profit and adjusts for non-cash items and working capital changes. The direct method, which lists gross cash receipts and payments, appears occasionally in 3-mark theory questions or as an alternative option. Unless the question explicitly instructs otherwise, always use the indirect method to save time and align with the standard marking scheme.

How do I handle the sale of a fixed asset at a profit or loss in the Cash Flow Statement?+

Show the full sale proceeds (cash received) under Investing Activities. Then, because the profit or loss was already included in net profit, you must reverse it in Operating Activities. Add back a loss (it reduced profit but did not consume cash) and subtract a profit (it inflated profit but belongs to investing). For example, if machinery with book value ₹1,00,000 sold for ₹80,000, show ₹80,000 inflow in Investing and add back ₹20,000 loss in Operating Activities.

What is the format for presenting a Cash Flow Statement as per CBSE guidelines?+

Use a vertical format with three main sections: A. Cash Flow from Operating Activities (start with Net Profit, adjust for non-cash and non-operating items, then working capital changes); B. Cash Flow from Investing Activities (list asset purchases, sales, and investment transactions); C. Cash Flow from Financing Activities (equity issues, loan receipts, repayments, dividends). Sum the three to get Net Increase/Decrease in Cash, add Opening Cash, and show Closing Cash at the bottom. Include clear sub-headings and show all workings in the margin.

Can I score full marks if my final cash figure is wrong but my method is correct?+

Yes. CBSE marking schemes allocate 1 mark for correct format and headings, 3-4 marks for accurate adjustments and method, and 1-2 marks for the final correct figure. If you transpose a number or make an arithmetic slip, you lose only the final-answer marks. Always show step-by-step workings—write 'Add: Depreciation ₹50,000' instead of just '50,000'—to earn maximum method marks even if the total is incorrect.

Where can I find additional Cash Flow Statement practice questions with solutions?+

NCERT Class 12 Accountancy textbook Chapter 11 contains solved examples and end-of-chapter questions. CBSE sample papers and the last five years' board question papers (available on cbse.nic.in) offer authentic practice. For unlimited questions, instant doubt solving via photo upload, and personalised feedback, try CBSETUTOR.ai at ₹999/month for Classes 6-12 with a 3-day free trial. The platform's Cash Flow Statement module includes 50+ worksheets, video walkthroughs, and AI-driven error analysis to accelerate mastery.

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