## Working Notes: T-Account Reconstruction
When the question gives opening and closing balances but not the individual transactions, reconstruct each ledger account as a T-account to find hidden cash flows.
### General T-account structure
```
[Account Name]
Dr side (Left) Cr side (Right)
Opening balance | Closing balance
Cash purchases | Cash sales / disposals
P&L charges | P&L credits
(plug = unknown) | (plug = unknown)
```
The balancing figure (plug) is the hidden cash figure you need.
### Accounts commonly reconstructed
#### Fixed Asset (PPE) Account
```
Dr Cr
Opening balance ××× By disposal (at cost) ×××
To cash purchases ××× By loss on write-off ×××
(hidden: cash paid) By depreciation ×××
Closing balance ×××
```
The hidden figure on the debit side = cash paid to purchase assets.
#### Provision for Tax Account
```
Dr Cr
To cash paid (tax) ××× Opening balance ×××
Closing balance ××× By P&L (new provision) ×××
```
Hidden debit = tax actually paid in cash.
#### Debentures Account (for hidden interest)
```
Dr Cr
To cash redemption ××× Opening balance ×××
Closing balance ××× By new issue ×××
```
If interest accrues on debentures but is not given separately, the Interest on Debentures account (accrual) is reconstructed to find cash paid.
#### Creditors for Capital Expenditure
When assets are purchased on credit, not all the cost was a cash outflow:
```
Cash paid = Purchases (at cost) – Increase in creditors for capex
```
Example: Equipment purchased ₹21,000; creditors for equipment increased by ₹10,500 → Cash paid = ₹10,500.
### Share Capital and Reserves — detecting share issues
```
Equity Share Capital (ESC)
Dr Cr
Closing balance ××× Opening balance ×××
By cash (new issue) ××× ← plug
```
### Capital Redemption Reserve (CRR) and revaluation
When preference shares are redeemed, the company must create a CRR equal to the nominal value redeemed. This appears as a non-cash transfer from P&L Reserve:
```
P&L Reserve Dr ×××
To CRR ×××
```
This transfer is not a cash flow — do not include it in operating activities.