Cash Flow Statements - Re: Share Issue help pls

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:25AM in AAT student discussion
Hi,

Just doing the DFS speciman paper for tomorows exam - I have just noticed something that I cant seem to understand properly and was hoping if someone could give me some pointers:

As a general rule the statement should show the flow of cash from one year end to the next year end, however in the Financing activities section there is an item on which I am confused:

Bank Loans Raised and Proceeds of Share Capital

Info as follows from balance sheet:

Years 2006 //// 2005

Bank Loans (3000) //// (2000)
Share Premium Ac 4000 //// 1000

The answer states that the following amounts are to be put into the Cash flow statement:

Bank Loans Raised - 1000 - which I can see is the increase of debt from 2000 to 3000 so the increase of cash flow in the year has increased by 1000.

Proceeds from Share issue - 5000 - this is the one that has thrown me - the answer is obviously yr 2005 and yr 2006 added together (4000 + 1000) - but why??

Should the answer not be 3000 ie the increase in the year of the share premium - 1000 to 4000???

Please can someone explain the above for me as to why and relieve the headache :lol:

Thanks in advance.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Cash Flow Statements - Re: Share Issue help pls

    your right in saying that there is an increase in the share account by 3000 but there is also a 2000 increase in the share premuim account if my mind serves me correctly

    hope this helps

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Cash Flow Statements - Re: Share Issue help pls

    Thanks for that I see it now - think the eye strain has taken over rationality!!! :lol:

    Thanks for answering anyway - much appreciated!!

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