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- This topic has 1 reply, 2 voices, and was last updated 3 months ago by John Moffat.
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- September 3, 2024 at 6:45 pm #710721
Hi Dear tutor, I need an explanation.
A business’s bank balance increased by $750,000 during its last financial year. During the same period it issued shares of $1 million and repaid a loan note of $750,000. It purchased non-current assets for $200,000 and charged depreciation of $100,000. Working capital (other than the bank balance) increased by $575,000.
bank increased by 750000 which will increase the profit–750000
loan repaid if I would not repay the bank loan then it will also increase the profit-750000
issued one million shares and why we deduct it how it can be possible i dd nit get it—(1000000)
if i would not buy non current asset then it would also increase the profit———-200000
working capital increase so it will increase the profit———————–575000
depreciation charge——————————————————————(100000)
1175000I did not get the share issues part.even i make debit and credit it has only effect the balance sheet not the income statement
September 4, 2024 at 8:18 am #710740This question is testing you on Statements of Cash Flows.
You know the change in the cash balance, the flows from investing activities, and the flows from financing activities. As a result you are able to work backwards and calculated the flows from operating activities.
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