Statement of Cash Flows Example 2

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  1. Avatar of sengseng sengseng says:
    April 29, 2012 at 3:22 pm

    I don’t really get it when profit on sales is added back to calculate other cash payment under direct method. Can someone pls explain me? Thanks in advance.

    • Avatar of umairazmat umairazmat says:
      June 8, 2012 at 11:07 pm

      @sengseng, i also did nt got y itz adding in cash flow????????

    • Avatar of johnmoffat johnmoffat says:
      August 2, 2012 at 9:53 am

      @sengseng, Note (b) of the question says that the profit on sale of the non-current asset has been netted of expenses (i.e. because it is a profit it has been treated as a negative expense – if it was not there then the total expenses would be higher).
      Since the profit itself is not a cash flow, it is not relevant for the cash flow statement. If we remove this ‘negative expense’ then the remaining expense figure will be higher.

  2. Avatar of shahbaz963 shahbaz963 says:
    January 9, 2012 at 4:55 am

    plz tell me why profit on sale of non-current assets is deducted?

    • Avatar of ibrahim23babayev ibrahim23babayev says:
      April 26, 2012 at 5:30 pm

      @shahbaz963, let’s say that we sold a non-current asset of net book value of 20K for 30K. So the profit on disposal is 10K. In cash flow statement we are concerned about physical cash, not profits. So we deduct the profit of 10K, but then, in investing activities hedding, we add that very 30K that we actually recieved

  3. Avatar of trevon2020 trevon2020 says:
    September 16, 2011 at 12:31 am

    i’m writing paper CAT 6/ FFA in December 2011, as meantioned by nosaj i would also like the lecturers to do one with the two years where u have to find the differences it would really help allot…keep up the good work and i’ll be waiting on your 2011 Dec notes….

  4. Avatar of nosaj nosaj says:
    August 16, 2011 at 2:16 am

    cashflow
    can \someone please assist when you are asked to calculate the net cashflow and you are given two years figure eg
    inventory o6 and 07 and i you would find the difference and aplly whether increase or decrease. If you are given two profits one for 06 and one for 07 how do you treat this

  5. Avatar of edwardkyei edwardkyei says:
    January 3, 2011 at 4:35 am

    i appreciate open tuition.it is much better than a free lunch which is not suppose to exist .a question regarding cash flow.under cashflow from finance activities shouldnt there be adj for loans recv in the period ?

  6. Avatar of vimalzincy vimalzincy says:
    November 22, 2010 at 2:42 am

    thx a lot :)

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