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Cash Flow statement – Big time Co.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Cash Flow statement – Big time Co.

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • May 12, 2021 at 12:08 pm #620395
    shahareel
    Member
    • Topics: 2
    • Replies: 2
    • ☆

    Dear Sir John.

    Given below is the question on cash flow.
    Big Time Co had the following transactions during the year.
    · Purchases from suppliers were $18,500, of which $2,550 was unpaid at the year end. Brought forward payables were $1,000.
    · Wages and salaries amounted to $9,500, of which $750 was unpaid at the year end. The financial statements for the previous year showed an accrual for wages and salaries of $1,500.
    · Interest of $2,100 on a long term loan was paid in the year.
    · Sales revenue was $33,400, including $900 receivables at the year end. Brought forward receivables were $400.
    · Interest on cash deposits at the bank amounted to $175.
    Using the direct method, what is Big Time Co’s cash flow from operating activities?

    As per my calculation after considering accruals & other adjustment.

    Sales -> 33400+400-900 = 32,900
    wages paid -> 9500-750+1500 = (10,250)
    purchase (18,500-2550+1000)
    interest paid -> (2100)

    However the interest received should be part of investing so should be excluded from operating activities. thereby I get the answer of 3600. which is wrong. I am stuck on this for a while can you please help me with this. Thank you.!

    May 12, 2021 at 4:00 pm #620408
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54723
    • ☆☆☆☆☆

    I do not know why you say that your answer is wrong.

    The correct answer is $3,600 !

    (I assume that you found this question in the BPP Revision Kit, and their answer also shows the correct answer as being $3,600!!)

    January 11, 2022 at 9:42 am #645641
    shahareel
    Member
    • Topics: 2
    • Replies: 2
    • ☆

    thank you

    January 12, 2022 at 8:23 am #645717
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54723
    • ☆☆☆☆☆

    You are welcome.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Cash Flow statement – Big time Co.’ is closed to new replies.

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