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How to adjust it to profit before tax to start cash flow from operations?
2001 2002
Accumulated profits 2942 3598Current liabilities
income tax payable 50 65
Deferred tax provision 30 25During the year the company paid dividend of 350
This is naughty of you! Asking (effectively) the same question on both F3 AND F7 forums!
Make you mind up – one or the other, but not both!
Is the answer $(296) loss?
Oh sorry for that because I was not sure it should be ask in F7 or F3
I only having the answer for the final of overall cash flow
by the way, may I know how to arrive it at 296 loss?The change in retained earnings is a loss of $(656)
But that is after a dividend appropriation of $(350) so the pre-dividend figure must have been $(306) and that’s the figure for profit after tax
Now, the tax
Open up 2 T accounts, one for deferred tax and one for current tax
Put in the values brought forward and carried forward in both of those accounts
Balance off the deferred tax account and transfer that balance to the current tax account
Balance off the current tax account and the missing figure represents the tax charge to the statement of income
We know what is the figure for profit after tax (see above) and now we know the tax charge that was deducted from profit before tax to arrive at our figure for profit after tax
And there you have it!
OK?
ok I get it is that means the figure for the tax charge to the statement of income is the same figure with tax paid in operating activities in this scenario when the question does not mention estimated tax for the year is how much?
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