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hi,
i would be very gratefull is anyone could find the time to explain whyyyyy (and i can not emphasize the “why” enough) the figure at the end of the cash flow exercise NET DECREASE/INCREASE IN CASH when added to the openening balance of the actual Bank record NOT the figure you get as a bank balance in the balance sheet of the company at period end. isnt the whole point of the cash flow exercise to get the net changes in CASH. if you had an opening balance of lets say 1,000$ and something happened during the year which caused changes and you have calculated that the net cash decrease is 700, shouldnt the balance in the BS on the bank account be 300$????? instead i get a figure of a 1,000, net decrease of 700$ and apparently cash and cash equivalents of the company ARE 300, but the balance sheet figure states “0”.
btw, the F7 syllabus is, for the most part, completely ridiculous. never in your life as an accountant or an auditor will you get to work on a consolidation of several companies by attempting to consolidate them based on financial statements of a previous period. i can also state with quite a lot of certainty that never will you in your professional life get to do a consolidation with changes as at March 31 and then all the other information stated as at April 1 the following year. there wlill also never be portion of information offered in milions, thousand and absolute numbers. these are tricks used by ppl who write the exams in order to make it more difficult to pass. so if you are memorizing everything without knowing what you are actually doing, dont worry, you’ll pass and be as usefull to your employer as before you took the exam. if anyone finds the time to answer the mistery explained above, im very gratefull in advance.
best of luck in the exam
If your BS at the end of year 2001 is $1000, and net increase/decrease in cash flows in your statement of cash flows is $700 net decrease, your balance at the end of the year 2001 will show you $300. If you don’t receive such answer – 1) check your calculations on preparation of the statement of cash flows, and 2) check if you correctly look at figure $300.
Your bank may have overdraft, your investments on the BS can contain some cash and cash equivalents etc.And for second part of your message..
I don’t think you’ll pass if you just memorise everything. Of course you have chance. But examiner can change question and add tricky notes their, so you need to UNDERSTAND apllying of standards and rules. It won’t be standard situation as during your studying (“memorising”).Instant poll of opentuition says, that important part of student’s preparation is not just learing rules, but trying to understand topics (https://opentuition.com/polls/which-are-the-most-important-in-your-acca-exams-preparation/)
And if you study how to consolidate, prepare SOFP, SOPL etc, you study standards and rules and how you can apply them at your working place. I find these studies and passing exams really useful.
There will be the same debits and credits (in exam and in your work): Dr non-current asset, Cr cash; Dr Cash, Cr share premium… You just need to apply knowledge to your practice.THANK YOU SOOOOOO MUCH. from this day on, you are my acca hero 🙂 it is overdraft, it didnt cross my mind to look at it. very very well done for u 🙂
it would be a lot easier to apply what i have learnt if i had decent explainations in the book or the exam kit. thanks for taking the time to answer, u helped me a lot.
while we r on the subject of cash flows, do u happen to know why we add back the interest and then take it out again under interest paid and same goes for any additional expenses related to loss on disposal of assets – could this be bcs we are taking the actual cash change for these transactions through accounts payable but we are just showing the transactions for presentation purposes in the cash flow? thanks a lot in advance. im guessing this is it, but if u find the time to answer, it would be great.
Nice to be helpful.. : )
I think we need to present on statement of cash flows amounts from different activities. And because operational activities of the business are main activities why it exists, users of financial statements would like to receive information about operational activities and understand how much business can generate cash flows from it.
Paying interest, disposal of non-current assets – they are not such activities why business exist. Thats my opinion..
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