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cash flow statement
Accountancy
sir in class 11 of cash flow i have a doubt. sir simply put i couldnt accept the solution of using opening - closing balance in case of debit items and vise versa in case of credit items so i thought we have shown 1000rs as sales which impacts the net profit but out of which we only received 925 so the difference of 75 is deducted from net profit and also both opening and closing stocks nill cashflow so to nullify the impact on net profit we added 50 on net profit and we got 225 net profit but the cashflow is 175 we have yet to take care of one item which is creditor here we paid 750 but we shouldve paid 900 and the same is impacted on net profit but we should alter 900 impact to 750 on net profit so i thought we paid 750 but we should only need to pay 700 so the difference is 50 so if i deduct that we would get the 175 net profit. sir if u see my attachment i guess u can understand my approach and clear my view i just think it as a sum to make net profit as cash only net profit rather making net profit equal to net cashflow. thanks for helping me with this in advance sir Video Details ------------- P1 - Advanced Accounting - Without AS AS 3 Cash Flow Statement #12. Adj. for Movement in Creditors
Answers (7)
You will do the difference for each item. Finally the net amount that you get would be cash flow from operations. The logic explained in the class is for understanding purpose. Opening - closing is for exam purpose. Net cash flow or cash profit - both would be same. I am not able to understand exactly which part did you have a concern.
sir i simply want to know whether i can do it without opening minus closing because as u can see in my attachment i didn't use opening closing approach rather i was thinking of removing non cash parts Cash Flow Statement Net Profit: ₹250 Adjustments for Non-Cash Items: Add: Opening Stock (₹200) Less: Closing Stock (₹150) Adjusted Net Profit: ₹300 Adjustments for Cash Sales Only: Less: Credit Sales (₹75) Net Operating Cash Flow: ₹225 Adjustment for Payments to Creditors: Less: Extra Payment to Creditors (₹50) Net Cash Flow: ₹175 so can i do sums like this sir in exams. i thought of this approach because i couldn't understand the creditors part in opening and closing method in that video i understood everything in that class except creditors part, so my question is can i use my treatment and can you please help me understand the creditors part of the sum as teached in that class.
Thread Starter
N.V Karthikeyansir i simply want to know whether i can do it without opening minus closing because as u can see in my attachment i didn't use opening closing approach rather i was thinking of removing non cash parts Cash Flow Statement Net Profit: ₹250 Adjustments for Non-Cash Items: Add: Opening Stock (₹200) Less: Closing Stock (₹150) Adjusted Net Profit: ₹300 Adjustments for Cash Sales Only: Less: Credit Sales (₹75) Net Operating Cash Flow: ₹225 Adjustment for Payments to Creditors: Less: Extra Payment to Creditors (₹50) Net Cash Flow: ₹175 so can i do sums like this sir in exams. i thought of this approach because i couldn't understand the creditors part in opening and closing method in that video i understood everything in that class except creditors part, so my question is can i use my treatment and can you please help me understand the creditors part of the sum as teached in that class.
even what you used is extra payment to creditors i.e closing - opening balance (being negative) You need to use the specific format in exams.