1. avatar says

    Sir you said that when we start a statement of cash flow the 4th figure to write down is ‘net cash flow for the year” I would like know how u got net cash flow for year (32) in example 6 please?

    • Profile photo of MikeLittle says

      By putting in the “Cash and equivalents carried forward”, then the “Cash and equivalents brought forward” that then means that you can arrive at “Net cash flow for the year”

      Can you agree “Cash and equivalents brought forward” as $81?

      Can you see the cash balance at the end of the year is $17 (in the current assets)?

      And you can see the overdraft amount of $60 carried forward (in the current liabilities)?

      And you’ve read note 3 on page 112?

      Then ……

  2. avatar says

    Hello Sir,

    The increase in receivables should be 92 according to the notes and not 32.
    The original figures are:
    2008 – 492
    2009 – 584
    There fore the net cash flow should be 11 negative according to notes answers.


  3. Profile photo of Accountmanaic says

    Sir, i understand how you arrived at all the figure except for the increase in receivable which i was thinking should be (584-492) 92…. i cant figure out how you got the 32…. i know i missing something in there. do help me please.

      • avatar says

        Same here – I think the notes have been updated since the lecture – check the answers; it’s 92 there (although you then end up with a cash c/fwd of -11. This is also in the answer and you have to adjust for the overdraft (60) from the bank which was not in the original lecture.

        All good!

        Fabulous lecture Mike. Thank you!

      • avatar says


        I have a comment on the notes answers as the 60 at the bank at the end of year 2009 isn’t an overdraft and should add up to the 32 and 17 giving a total of 109 !
        we deduct that from the 81 opening balance to arrive at a positive net cash flow of 28 (if receivables figure in the cash flow statement is 92 negative)

        Right Mike?


  4. Profile photo of Accountmanaic says

    Sir, i understand how you arrived at all the figure except for the increase in receivable which i was thinking should be (584-492) 92…. i cant figure out how you got the 32…. i know i missing something in there. do help me please.

    • Profile photo of MikeLittle says


      You need to be careful here! Why did you stop at “goodwill” – until the recent property price crash, land and buildings values were also increasing. In fact, if you had bought pretty well any property in the UK 40 years ago, it’s most likely that its value in 2014 is substantially greater than you would have had to pay 40 years ago.

      Right! So what’s depreciation about? Is it to ensure that the carrying value of an asset is somewhere close to its market value? A resounding NO! Depreciation is to allocate to those years that benefit from the use of an asset the proportionate share of the cost of that asset over its estimated useful life. So even though the value of an asset may well increase over time, nevertheless we depreciate it.

      Now goodwill. You’re right of course. Goodwill can increase in value, particularly where we work hard at building up good relations with our suppliers, customers, bank, employees, shareholders – in fact, all our stakeholders. But can you not see that that is an increase due to our own efforts? This is “internally generated” goodwill and, of course, this is NOT recognised in the financial statements.

      Where we have purchased goodwill on the acquisition of a subsidiary …. well that’s a different story. Like the buildings mentioned earlier in this post, a number of years are hopefully going to benefit from that acquisition, so we shall impair it – typically over a period not lasting greater than 20 years, but it will be subjected to an annual impairment review until it is fully “used up”

      But even after it’s been fully impaired, we are still getting benefits from this notional, intangible asset! Yes, but that’s because we have been working hard at building up good relationships with our suppliers, customers etc and that maintenance of good relations is as a result of our own efforts – that is, it’s internally generated. So no recognition


  5. avatar says

    Hi everyone,

    Just new op tuition and quite happy to join the crew. Mr mike seems to be very resourceful.
    Well since we’re dealing with IAS7, could you give me the steps to follow when dealing with a mid year acquisition?
    Would be going in for F3 in a couple of hours.

  6. avatar says

    Thanks mr mike and please i want ask
    why you do not do working in SCF like consolidation financial statements ? and is marker give me marks on my working? and if my last figure is wrong i will take marks on my all answer ? and for your shortcuts like TNCA can i use it like you or can i change it ?
    please help

    • Profile photo of MikeLittle says

      There really is no need to get into workings as complicated as for consolidations. The most difficult is the working for TNCA but even that becomes relatively easy with practice.

      Yes, you will get marks for workings if you don’t have the time to finish the cash flow statement – but you need to head up your workings to identify which figure you are calculating and therefore also how much CASH is involved in, say, investment income received.

      If you follow my style of attacking these questions, your last figure cannot be wrong! If you mean the figure that you have just calculated in your workings, say, investment income received, then you will not gain the mark.

      Work on the principle that for each and every figure you get correct in the Statement of Cash Flows, you will earn one mark

      I would abbreviate TNCA, INCA, C & E, Pbles, Rbles …..yes, I would abbreviate – just so long as your abbreviation is pretty clear. A bit of a problem with “inv” for inventory and “inv” for investments

      • avatar says

        Thanks Mr Mikel

        I use instead Pbles , AP and instead Rbles AR AND (COST OF SALES ) Cogs and other shortcut what about that ? i can use it when when i prepare financial position or cash flow in exam? and some Terminology i do not know shortcut for it like( accrued expenses ) can i write full term like ( accrued expenses ) and TNCA in the same financial statement see that

        TNCA 200

        INCA 150
        INVENTORY 70

        A R 50
        account payable 100

        thanks mr mike

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