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Nobus Co is producing its statement of cash flows for the year ended 31 December, 20X5. The
accountant has identified the following balances in the financial statements:
$
Interest accrual b/f 4,900
Interest accrual c/f 1,200
Interest payable 20,000
Interest received 13,000
Proceeds of share issue 120,000
Loan repaid 140,000
Dividends (statement of changes in equity) 600,000What is the net cash flow from investing activities?
Ans. 13000 inflow
why we don’t add dividends, could you explain Dividends (statement of changes in equity) mean?Could you explain the Interest accrual and Interest payable part. It is out of context but it is interesting to me how we will treat them in a T-account and find the charge for the SPl.
My other question is that – Interest= Interest paid – Interest Received.
What does Interest stand for here. Is it Interest expense in the SPL.. I have seen this in the study book, so it is really interesting to me. If we calculate according to the study book Interest= Interest paid-Interest received=20000-13000=7000. But if we make a T-account from the given question to you we find that SPL will show us 16300. Can you explain this question please?Why do you want to write up t-accounts? You cannot be asked to produce t-accounts in the exam.
The entries for interest are the same as the normal entries for accruals and prepayments as explained in my free lectures.
In the Statement of Cash Flows it is the net of the interest actually paid and the interest actually received.
In the SOPL it is the interest expense and the interest receivable – not the cash actually paid and received.
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