Financial statements sample assessment 2 question 1
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elliec
Registered Posts: 2
Hi everyone
I am having trouble with the Statement of Cash Flows section of question 1, sample assessment 2 for the financial statements unit.
At the top is net cash flow from operating activities, and the answers sheet says the figure for this is £16,345. I really can't see where this has come from - I always through net cash flow from operating activities was the same as the operating profit figure from the Statement of Profit Or Loss but that would be £11,787.
Can anyone help please?
I am having trouble with the Statement of Cash Flows section of question 1, sample assessment 2 for the financial statements unit.
At the top is net cash flow from operating activities, and the answers sheet says the figure for this is £16,345. I really can't see where this has come from - I always through net cash flow from operating activities was the same as the operating profit figure from the Statement of Profit Or Loss but that would be £11,787.
Can anyone help please?
0
Comments
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You've missed out a big chunk of the question: the Reconciliation of Profit from Operations to Net Cash from Operating Activities.
This is where, using the Indirect Method the adjustments for non-cash items eg Depreciation are added and such as Interest or Dividends received are removed, changes in working capital amounts are accounted for, then interest paid and relevant tax paid is deducted.
It starts with the Profit from Operations figure: 11787 and ends with the Net Cash figure: 163450
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