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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
This 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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