Arazon Ltd Operators a standard costing system following information is supplied by the company------------------- (j) Fixed expenses efficiency variance.

Arazon Ltd Operators a standard costing system following information

is supplied by the company------------------- (j) Fixed expenses efficiency

variance.

Ans.     FUNDS FOLW STATEMENT

SCHEDULE OF CHANGES IN WORKING CAPITAL

Particulars	Amount		Changes
A. Current Asset      Cash in Bank      Accounts Receivable      Bills Receivable      Inventory        B. Current Liabilities         Creditors      Bills payable      Outstanding expenses   C. Working capital (A-B) D. Net Decrease in Working Capital	2006	2007	Increase	Decrease
	100 105 130 110   445 100 50 25 175 270   270	65 120 140 40 365 40 60 20 120 245 25 270	15 10 60 5 25 115	35 70 10 115

Funds from operators                                       Rs

Net Profit from operators                                  10,000

Add:    Depreciation on machinery                    10,000

Depreciation on Buildings                                  10,000

Amortization of patients                                      5,000

Loss on sale of machinery                                   5,000

       Rs.40, 000

                     FUNDS FLOW STATEMENT

As on  31^st March 2007.

Sources	Rs	Applications	Rs
Funds from operators	40,000	Purchase of Machinery	65,000
Share Capital	1,10,000	Purchase of Land	70,000
Sale of Machinery	10,000	Decrease of working Capital	25,000
	1,60,000		1,60,000

Working Notes:

Bonds payable have been considered as long term liability.

ACCUMALATED DEPRECTATION ACCOUNT

Particulars	Rs	Particulars	Rs
		By Balance c/d	30,000
		By Adjusted profit and loss A/c	5,000
To Balance c/d	35,000		35,000

MACHINERY A/C

Particulars	Rs	Particulars	Rs
To Balance b/d	1,20,000	By Bank A/c (Sales of Machinery)	10,000
		By Loss on Sales	5,000
		By Depreciation	10,000
To Purchase of Machinery	65,000	By Balance c/d	1,60,000
	1,85,000		1,85,000

CASH FLOW STATEMENT

A. Cash from Operating Activities

Particulars	Rs	Rs
Profit after Depreciation		35,000
Adjustment for
Loss on sale of Machinery	5,000
Amortization of patents	5,000
Transfer to General Reserve	15,000
Transfer to retaining Earning	40,000
Revenues	40,000	1,40,000
Operating Profit Before Changes
in working capital
Add: Decrease in current Assets
Inventory	70,000
Add: Increase in current liabilities
Bills Payable	10,000	80,000
		2,20,000
Less : Decrease in Current Liabilities
Trade Creditors	60,000
Outstanding Expenses	5,000	65,000
		1,55,000
Less : Increase in Current Assets
Accounts Receivable	15,000
Bills Receivable	10,000	25,000
Cash Flow from operating activities		1,30,000

Particulars	Rs	Rs
B. Cash flow from investing Activities
Inflow from sale of machinery	10,000
Cost of machinery sold	15,000
	25,000
Less: Loss on sale	5,000
	20,000
Less: Purchase on machinery	65,000
Purchase on Building	10,000
Purchase on land	70,000
		(-1,65,000)
C. Cash from financing activities
Nil
Net Decrease in cash		35,000
Cash Balance on 1.1.2006		1,00,000
Cash Balance on 31.3.2007		65,000