All cases
Trace a Pune subscription business’s first month
Link the three financial statements · Fictional case
The situation
A firm opens with ₹20 lakh cash and equity. It earns ₹8 lakh, collects ₹6 lakh, pays ₹3 lakh operating costs and buys ₹4 lakh equipment. Ignore tax and depreciation.
Your task
Tie net income, operating cash and closing equity.
Reveal step-by-step solution
Set up the problem
Profit = ₹8 − ₹3 = ₹5 lakh. Receivables increase ₹2 lakh.
Work through the numbers
Operating cash = ₹5 − ₹2 = ₹3 lakh. Ending cash = ₹20 + ₹3 − ₹4 = ₹19 lakh.
Interpret the result
Assets are ₹19 lakh cash, ₹2 lakh receivables and ₹4 lakh equipment. Total ₹25 lakh equals opening equity plus ₹5 lakh profit.
What to remember
Tie ending cash to the balance sheet and reconcile retained earnings independently.