Financial statements practice paper 1question 1.5 part E

Deaniedani
Deaniedani Registered Posts: 26
in AAT Level 4 (Level 8 in Scotland)
I'm stuck on 1.5 part e, I know the answer is £7500, but I don't know how to work it out to get to that answer. Any help would be appreciated.

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  • Deaniedani
    Deaniedani Registered Posts: 26
    Meant 1.5c
  • Adele69
    Adele69 Registered Posts: 320
    edited January 2017
    It's about Changes in Working Capital.

    The Profit from Operations (before deducting Depreciation) is basically saying if I understand correctly to take this figure and not worry about adding Depreciation since they haven't given info for this.

    The only real information you have is the Inventories, Trade Rec and Trade Pay for 20x0 and 20x1.

    Inventories = 500 dr (as it decreases 4700 to 4200)
    Trade Rec = 200 cr (as it increases 3400 to 3600)
    Trade Pay = 100 cr (as it decreases 1600 to 1500)

    7300 + 500 - 200 - 100 = 7500

    I'm revising for this exam next week (so some of this is fresh) and haven't tried either of the two AAT practice assessments yet
  • Deaniedani
    Deaniedani Registered Posts: 26
    That makes perfect sense, thank you very much for the help. :)

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