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August 6, 2016 at 5:18 am
could you plz explain me why interest paid/received is deducted from profit after tax in Cash flow from operating activities
John Moffat says
August 6, 2016 at 9:12 am
Interest received is not deducted!
Interest paid is deducted from the profit after tax because it is a cash payment, and the statement is showing cash receipts and payments.
Acca nerd says
May 26, 2015 at 6:49 pm
Mr Moffat, could you please go through Retained Earnings in 2 3 words. I want to know ur explanation.
May 26, 2015 at 6:58 pm
I am not sure what you are wanting! 23 words about what?
The retained earnings increase each year because of the profits that have not been paid out as dividends.
So the increase in the retained earnings will be the profit for the year less whatever dividend has been paid.
May 26, 2015 at 8:14 pm
So any decreases in profit lead to decreases in REtained earnings and vice versa, right?
E.g 1)depreciation policy changed from 10 % to 20 %.
What’s the effect? Retained earning should decrease ain’t it?
And 2) do losses in inventory have any effect on sales? Because I have read that ” no ” and didn’t understand why:) thank you.
May 27, 2015 at 9:25 am
Any profit increases retained earnings!
But if we reduce the profit then we reduce the retained earnings.
Why should losing inventory affect how much you sell? What you sell depends on what people want to buy!
March 7, 2016 at 10:14 pm
Could you please, explain the difference b/w operating activities and investment activities!? Thanks in advance!
March 8, 2016 at 7:19 am
But I do explain both in this and the following lectures!
Operating activities are the revenue and expenses that appear in the Statement of profit or loss.
Investing activities are the purchase and sale of non-current assets.
April 29, 2015 at 1:04 am
I have a few questions:
1) What if there is a decrease in share capital & share premium? How do you treat this?
2) Say Yr1 there was no Loan but Yr2 there is loan of say 100,000. If you calculate loan repaid then its will be (0-100 = -100) Is this shown as a cash inflow or simply its left out?
Thanks in advance looking forward for a response as soon as possible.
Video helps a lot *thumps up*
April 29, 2015 at 8:26 am
In future, please ask this sort of question in the Ask the Tutor Forum rather than as a comment on a lecture.
1. Share premium can only decrease if there has been a bonus issue of shares. In that case there is no cash flow (share premium down, share capital up).
Share capital will not decrease – not in Paper F3.
2. In this case it means they have taken a loan (borrowed money) and therefore there is a cash receipt which will appear under the heading of financing activities.
April 18, 2015 at 8:24 am
Just wondering whether theirs a possibility of getting a question related to cash flow for one of the 15 mark questions. If so will it be in the Indirect method.
April 18, 2015 at 10:06 am
Yes – it is possible. (Try our mock exam!)
It ask about either method, but any numbers will probably be the indirect method.
April 13, 2015 at 3:13 pm
Will we be asked to prepare a full cash flow statement at the exam. Or is it more fill in the blanks
April 13, 2015 at 3:16 pm
Assuming you are taking the computer based exam, it will be fill in the blanks.
However you need to know the layout because you can be asked in the multiple choice section which heading certain items appear under.
March 30, 2015 at 1:59 pm
Great Video. Clearly explained. Now onto the example…!
January 20, 2015 at 4:34 pm
Yes – the cash balance also includes short-term investments.
Proceeds of sale of non-current assets is shown under ‘cash flows from investing activities’.
(Have you watched the lecture, because all these questions are actually answered in the lecture 🙂 )
January 21, 2015 at 11:08 am
sorry sir, actually i hv watch already , but my english is poor, cannot fully understand.
thank you your explain now already understand and find out the answer. Thank so much.
January 20, 2015 at 12:30 pm
if question have cash in hand and bank overdraft how to do this?cash balance b/d and c/d is cash in hand or bank overdraft?
January 20, 2015 at 1:10 pm
The cash balance is the net of all cash balances (i.e. cash at bank plus cash in hand minus bank overdraft)
January 20, 2015 at 2:48 pm
short-term investments want to plus?
January 20, 2015 at 2:57 pm
proceeds of sale non-current asset investments it want to record in ?
November 4, 2014 at 10:23 am
Hey Mr Moffat
Could you just give a minute and explain how will we know if interest has actually been paid or charged only if we have been given it in the statement of profit and loss charged after Operating profit ? Like in example One it was given and it was hard to understand if it was paid or not yet in the answer it was deducted from cash generated from operation to get Net Cash from operations.(Treated as interest paid)
Please explain this.
🙂 good day!
November 4, 2014 at 4:19 pm
The interest shown in the Statement of profit or loss is the interest expense for the year.
If the amount paid during the year is less, then the balance would still be owing and there would be a current liability in the SOFP.
So….we take the expense from the Statement of profit or loss, and adjust by any current liability in the SOFP to get the interest actually paid during the year.
November 4, 2014 at 5:03 pm
Could you also tell me the double entries when a cash discount has been given on sales and the company is registered for sales tax.How will we calculate the receivables figure and what will we show in the T accounts ?
Many Thanks 🙂
November 4, 2014 at 6:52 pm
You will not be asked for the double entry – F3 is not a double entry exam!
If there is a cash discount, then the sales tax is calculated on the invoice amount after subtracting the discount (and it will not be changed even if the customer is late paying and so does not get the discount).
We debit receivables with the gross amount (including sales tax); Cr Sales with the net amount, and Cr Sales tax with the tax.
When they pay, we Dr Cash and Cr Receivables.
If they have been able to take the discount, then we Cr Receivables and Dr discount allowed, with the amount of the discount.
July 23, 2014 at 2:31 pm
Interests received & discounts received will be classified under operational or investment activities?
July 23, 2014 at 4:39 pm
Interest received is a cash flow from investing activities.
Discounts are not a cash flow and so do not appear anywhere.
July 23, 2014 at 11:27 am
Is bank overdraft considered as a cash equivalent?
July 23, 2014 at 4:40 pm
Yes – it is a negative cash balance (this is made clear in the lecture).
February 21, 2014 at 1:18 am
Ok. Many Thanks
November 28, 2013 at 3:42 pm
They have received cash of 1669200. However some of that cash was not for this years rent – it was owing at the end of last year for last years rent (the rent in arrears at the start of the year) – so you need to subtract that. Also, it does not include the cash that was received last year for this years rent (the rent in advance at the start of the year) – so you need to add that.
Looking at the end of the year, there is rent in arrears – rent still owing to use for this year – and so that needs adding.
Finally, there is rent in advance – we have received cash this year for next years rent, and so that needs subtracting.
Now you should be able calculate the answer yourself.
PS Please do not ask questions below a lecture that is on something completely different! The place to ask questions is in one of the forums – either the general F3 forum or the F3 Ask ACCA Tutor forum.
September 24, 2013 at 7:42 pm
What is the difference between issue of loans and redemption of loan notes please?
September 24, 2013 at 7:55 pm
‘Issue of loans’ means that the company is taking a loan – they will be receiving money.
Redemption of loans is another word for repayment of a loan – they will be paying money.
September 25, 2013 at 1:57 pm
September 16, 2013 at 12:50 pm
Sir what exactly “cash equivalent” ??
September 16, 2013 at 1:45 pm
cash equivalents are assets that can be turned into cash quickly, so short-term investments of cash.
September 16, 2013 at 1:57 pm
Oh Thankyou! Can you please give any examples?
September 16, 2013 at 2:04 pm
Short-term investments – e.g. government securities, shares in big companies (provided they were bought for the short-term and not for the long-term)
September 17, 2013 at 2:16 pm
Ok. Thank you very much! 😀
January 19, 2013 at 4:51 am
Is it enough to solve the tricky kit questions of bpp and kaplan ??
these are the main theme of the concepts , how can one prepare for a tough exam question ?
January 19, 2013 at 12:31 pm
Yes – as long as you understand. (and more importantly, its enough to pass the exam!)
Atul Bishnoi says
November 10, 2012 at 10:05 pm
hi.. as tutor siad look at example ..where iz that example ..i mean in which book ?
November 11, 2012 at 8:10 am
OpenTuition Course notes
November 14, 2012 at 7:23 pm
@admin, Thank you very much.
October 11, 2012 at 2:05 pm
Thank you. Well explained.
August 10, 2012 at 12:48 am
the intro is wonderful. Already learnt and still more lectures to go. Tnks
April 7, 2012 at 7:07 pm
March 25, 2012 at 2:31 pm
For f2 there are lectures missing for some chapters how can i get them please ex 2, 3, 6,14,16,18,19,20,21
For f3 chapters 5, 7,20
thank you for quick reply.
August 2, 2012 at 9:40 am
@mellen, For most of the missing chapters you must work through the course notes (or study books) yourself. This is because there are no numbers and there is no point in a lecture simply reading the course notes.
Lectures for the other chapters will be uploaded in the next few weeks.
(F2 chapters 2, 18, 19, and 20 are not missing – they are there 🙂 )
February 10, 2012 at 6:22 pm
November 9, 2011 at 10:01 pm
Not all F3 lectures work on the iPad at the moment, around 50% does though
November 9, 2011 at 7:09 pm
Dear Admin, is it possible to view the audio or video lecture via ipad. Thanks!
July 21, 2011 at 11:08 am
July 21, 2011 at 10:43 am
I need lecture note for f6.
June 1, 2011 at 2:29 pm
i tried opening f3 course notes and lecture video, without success.I need your suggestion.
June 1, 2011 at 3:01 pm
See support page for help
November 25, 2010 at 11:26 pm
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