PLEASE HELP ME WITH CASHFLOWS I'M GOING INSANE!!!!

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Im in desperate need of help with cashflows for DFS, does anyone have any general hints on things to remember? I seem fine doing them in class and have no problem with the reconciliation of profit bit but then after that I go blank without my tutor prompting me. I always seem to end up hundreds of thousands out!

This is the first time ive been totally clueless when doing technician and its freaking me out as the exam is in 5 weeks!! Please help!!! x :oops:

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PLEASE HELP ME WITH CASHFLOWS I'M GOING INSANE!!!!

    The key to grasping cash flows is to understand what is happening to your cash balance. For example, a common misconception is to put taxation as the amount as per the P&L charge, rather than the amount actually paid (i.e. balance b/f plus charge for the year less balance c/f = tax paid).

    When working through the cash flow always consider whether the cash goes up or down as a result of the transaction - don't work on the accruals basis always work on cash basis.

    I know this advice is pretty vague, but in order for me to be more specific I will need to know exactly what you are struggling on .

    Kind regards
    Steve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PLEASE HELP ME WITH CASHFLOWS I'M GOING INSANE!!!!

    First of all grasp what goes in each statement:-

    Operating profit to net cash inflows
    Cash flow statement

    Then go through the information you are presented with line by line. Ask yourself the same question everytime "how does this affect the cash" slot in your figures to the correct statements, add them up and you come back to what physically cash (or not) you have at the balance sheet date.(net difference between both years)

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PLEASE HELP ME WITH CASHFLOWS I'M GOING INSANE!!!!

    Not necessarily the cash in the balance sheet this year - it usually works as: last years balance minus this years balance (if cash has decreased) = decrease in cash in the period or (last years balance [if bank is an asset] plus the overdrawn balance) if the balance is overdrawn in the current year = decrease in cash per the cash flow statement this year or vice versa if cash has increased on the previous year.

    Regards
    Steve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PLEASE HELP ME WITH CASHFLOWS I'M GOING INSANE!!!!

    Quite right. It was late on a sunday night and I was putting a quick reply. Updated the last line in my earlier post.

    Regards

    Dean

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