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      • dear sir, there is a quite big jump between example 1 and 6 regarding the 50. would you please help us understand?

    • TNCA working:

      Opening balance = 681
      Less: Sold from pool (103+6) loss movement for yr
      Add: Additions into pool 200
      Add: Revaluations 110 movement for yr
      Expected closing balance 882
      Actual closing balance 832
      Diff = Depreciation = 882-832 = 50

    • Cash from share issue, share premium 103: share capital amount has increased by 200 during the year but 75 of that increase is accounted for by the use of that amount from the share premium account so there must have been a new issue in December of 125 shares

      The share premium account started the year at 284, 75 was used to finance the issue of the 1 for 4 bonus issue so that opening balance falls to 209, and it finishes the year on 312 so there must have been a premium received on the new issue of 103

      Debentures 132: opening balance was 88, closing balance was 220, therefore 132 has been borrowed this year

      Depreciation 50: check the question and answer for example 1 in this chapter. Follow that through step by step and then apply the same principles to example 6

      And if you’re still having problems, post again and I hope that I’ll see it – I rarely look in the “recent comments” posts

  5. Hi
    I guess we have missed the increase in bank balance of $60K.
    And as I can see the comments above there is a difference of $92K in Receivables, this is the reason the answer is not matching.
    If we add the Bank in Cash & Equivalent in C/F balance then there is we got a positive balance of $28K not $32K in negative

    Thanks
    Chiranjeev

    • It’s on my list of lectures to re-record!

      I changed the figures to bring the question more into line with F7 cash flow questions – but I changed the figures after I had recorded the lecture 🙁

      • It’s totally fine but I want to ask that what we have to do with the changes in bank balance?
        Do we have to add in cash and cash equivalent?
        If no then what we have to do with that?

  6. Hi Mike,

    First of all keep up the good work you’re doing:)

    Secondly, can you kindly explain to me from where is the $364 re ‘Purchase of Investments’ coming from please? As I was doing 396-125 (taken from the question and not 364-125.

    Thank you in advance and happy weekend 🙂

  7. Mike,

    Great lecture, brilliant wit throughout.

    Shame about the omissions but that should in no way affect students and it’s a useful lesion that even those that do this day in day out can make a mistake.

    The lesson is take your time and take care.

    Thanks,

  8. Hi Mike, Thank you so much, I have learned a lot from you. I want to highlight 1 mistake beside overdraft omission, Receivables increased by 92 not 32, so you miss inflow of OD amount of 60 and outflow of Receivables of 60. Thats why there is no effect, 60 – 60 = 0.

    One Question, OD will be treated in Operating or Financing activity???

      • Hi Mike, Thank you so much for the lectures, just a little confused on the end part, maybe I am missing something.

        In the solution in the actual written notes the net decrease for the Year is -92 and end of year is -11 ,as opposed to -32 and 49 in the lecture .
        In the lecture Receivables are 32K and in the written notes they are 92 k which covers the 60K difference.

        As the Overdraft is also 60K , I just want to clarify that the overdraft treatment is only to be looked at in the net increase/decrease in cash and cash equivalents and nowhere else on a cash flow?

        Regards,

        Maria

    • From the statements of financial position, we have brought forward and carry forward cash + bank positions (don’t miss the overdraft, nor any cash equivalents in the notes to the question)

      Check it out and let me know if you still have a problem

  14. Sir, thank you for the lecture!

    I have one question. In the balance sheet, there is a current liability to bank. I wonder how current liability to bank affects statement of cash flows.

    Thanks!

    • Hi

      This would be better posted on the “ask the tutor” forum – it’s just fortunate that I happened to see it this time!

      The whole aspect of bank overdrafts is dealt with within the video lectures. Have you watched them? If not, please do so. If you have watched the videos, please let me ask you to watch again but this time pay attention!

      :-))

      If you’re still stuck, post again but, next time, post on “Ask the tutor” forum

  15. Just started studying this lesson for F7 december exams! But I have done basic and comprehensive questions on cash flows for O/L, A/L & AAT exams… But never got a clear lecture like this! I have no words….. thanks alot Sir! May God bless you in many ways!

  16. Dear Mike,
    under the CL, we have an overdraft balance of $60, so when we will calculate the cash and cash equivalent C/F for end of the year, then will we not take into consideration? if then, this extend C/F balance coming $(11). Even on the notes it shows like that as well.
    copied from notes
    Net cash flow from financing activities 360
    Net decrease in cash and cash equivalents (92)
    Cash and cash equivalents at start of the year 81
    Cash and cash equivalents at end of the year (17 + 32 – 60) (11)

  17. 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?

    • 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 ……

  18. 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.

    Thanks,

  20. 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.

      • 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!

      • Hi

        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?

        Regards,

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