Cash Flow Statement

Londina

Hi everybody

I don't understand the cash flow statement in Unit 11 DFS, for what is for?
How do I know if my one is correct when I do it? Does it have to balance with the bank account figure in the balance sheet??

oh, I'm so confused!:crying:

Any help will be appreciated.

Paul24

You are reconciling profit before taxation to cash balance. This process effectively strips out accounting transactions where no physical cash has moved, such as depreciation, increases in current assets / liabilities. You need to learn which way round the adjustment will be made. For example, If inventories increase in the balance sheet, then this needs to be taken off your profit figure in the reconciliation, as cash has been spent to increase your asset. An increase in payables would efffectively have the opposite effect. Less cash has been spent, so will be added to your profit figure in the reconciliation.

Regards

Paul

Londina

Many thanks for the comment