Question

A company’s Profit before tax for the year is ₹6,00,000. Depreciation charged is ₹50,000. During the year, trade debtors increased by ₹40,000 and trade creditors increased by ₹30,000. The Provision for Tax at the beginning of the year was ₹80,000, and at the end of the year it stood at ₹1,20,000. Actual tax liability created during the year was ₹1,50,000. From this information, calculate the amount of tax actually paid during the year and also determine Net Cash from Operating Activities (CF

Q: Answer-A company&rsquo;s Profit before tax for the year is ₹6,00,000. Depreciation charged is ₹50,000. Duri...

Tax Provision Ac logic o Opening Balance 80,000 o Add Current Year Provision 1,50,000 o Less Closing Balance 1,20,000 o Balancing figure Tax paid 1,10,000 CFO o PBT 6,00,000 o Add Dep 50,000 6,50,000 o Adjust WC 40,000 30,000 10,000 6,40,000 o Less Tax paid 1,10,000 5,30,000