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Dear Sir,
What is the logic in consolidated cashflow when it comes to Inventory, Receivable and Payable.
With regards to Disposal of Sub and acquisition of subsidiary.Is there an easy to way to remember the add or deduct.
I did Question Hill and Moyes – And it seems they both have opposite effect and made me so confused.
Imagine that at the start of the year you own 10 pairs of shoes. At the end of the year you own 18 pairs of shoes. During the year your cousin gave you 5 pairs of shoes.
How many pairs of shoes did you buy from the shop?
Answer = 3 pairs.
Now lets look at inventory:
Start of year 10
Sub acquired 5
End of year 18Therefore cash paid = 3
Hope that helps
PS Sub acquired ALWAYS ADD
Sub sold ALWAYS DEDUCTConsolidated SCF – Moys Co Given Corre Disposal of Barham Acqn of Davenport
Decrease in Inventory 39 30 -16
Increase in Trade Receivable 7 -14 27 -21
Increase in trade payable 18 36 -23Thank you for above response. I do understand opening – Clos = result trust the sign for Asset group and reverse the sign for liab group
but lets be honest, ACCA questions are never so simple – and they dont make it easier where in model answer they apply diff techniques ( I am comparing this above techniques with the one with Hill Co)
I do understand Decrease in inv is opposite to Increase in inventory. However, Increase in receivable and increase in payable are complete opposite but yet when adjusted Disposal and acqn amounts both have same sign. !!!!
Sorry , I am trying to send some sort of table format but when posting the formatting are getting
lost.
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