• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

overtrading

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › overtrading

  • This topic has 5 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • October 6, 2021 at 2:58 am #637075
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    sir in the lectures when the illustration 1 was done ,

    the inventory were increased as it doubled
    the receivables were increased as it doubled
    and sir increased the payables as it doubled as well

    but why did not the cash get doubled ?

    i wonder why

    October 6, 2021 at 7:50 am #637108
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    That is the whole problem with over-trading.

    If they had planned properly and raised more long term finance then they would be able to have double the cash. Because they have not raised more long-term finance they are forced into cash problems because the finance for the extra receivables and inventories has to come from somewhere.

    October 6, 2021 at 2:14 pm #637132
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    Thank you sir

    The difference between
    Current assets and current liabilities is working capital

    Can we also calculate the working capital by simply looking at the differences between

    The equity and non current assets ?

    October 6, 2021 at 3:26 pm #637138
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    No we cannot.

    The working capital is the difference between the total long-term finance and the non-current assets, and the total long-term finance is the equity plus the debt finance.

    October 6, 2021 at 7:44 pm #637152
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    Sir working capital can be found in 2 ways

    Way 1 is current assets less current liabilities

    Way 2 is equity + long term debt ?

    Long term finance which is equity + debt is also known as capital employed right sir

    October 7, 2021 at 9:05 am #637185
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    Way 2 is not correct. It is equity + long term debt (which is the capital employed) less the non-current assets.

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Amalsudheesh on FA Chapter 6 Questions Depreciation
  • Ravendra Arjune on FA Chapter 22 Questions Group Accounts The Consolidated Statement of Financial Position (1)
  • Ken Garrett on The Nature of Performance Management – ACCA Advanced Performance Management (APM)
  • Mustafy on Objective of financial reporting – ACCA Financial Reporting (FR)
  • John Moffat on IAS 16 Property, Plant and Equipment – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy