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Neglience claim

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Neglience claim

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • April 5, 2018 at 3:23 am #445080
    xiiaolih
    Member
    • Topics: 65
    • Replies: 42
    • ☆☆

    in arriving at Net Cash Flow from Operating Activities there should be a deduction of the non-cash item of 200 that will have been credited in arriving at profit before taxation and

    also in the section for arriving at Net Cash Flow from Operating Activities there should be a cash outflow of 200 in respect of the settlement of the obligation

    For the above 2 sentences, is that means showed it as follow:

    Profit before tax xxxx
    Adjustment:
    Add: provision for neglience claim 200
    Operating Profit before working capital changes xxx
    Increase/decrease in inventory
    Increase/decrease in payable
    Increase/decrease in receivable
    Cash generated from operations
    Neglience claim paid (200)

    Net cash flows from operating activities xxx

    Am I correct? but if I do so, it means there do not have any payment made during this year?? because the provision is made few years ago one, not current year provision. If I do so, my cash flow cannot balance ady because one add back and then one minus off so no effect on the cash flow figure.

    April 5, 2018 at 7:11 am #445110
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23329
    • ☆☆☆☆☆

    “Add: provision for neglience claim 200”

    No – it means that the figure of 200 should be DEDUCTED – it will already have been credited in arriving at profit before tax but because it’s non-cash we need to deduct it from that opening figure

    Try it now

    OK?

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Neglience claim’ is closed to new replies.

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