Cash Flow Statement
This query is : Resolved
Guest
Guest
(Querist)
18 December 2009
why we add increase in current asset and decrease in current liabilities & deduct decrease in current asset and increase in current liabilities FROM OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES aS pER AS-3??
Kindly explain with current asset example of prepaid expenses and current liability example of Outstanding expenses?
THank you.
Kindly explain with current asset example of prepaid expenses and current liability example of Outstanding expenses?
THank you.
Manish Soni
(Expert)
18 December 2009
entry for increase in current assets:
Curent Assets a/c_______________Dr.
To Cash a/c
it means that there is cash outflow.
Reverse entry in the case of inflow..
Similarly in case of current liabilities:
Cash a/c_________________________Dr.
To Current Liabilities a/c
it means that there is cash inflow.
Reverse entry in the case of outflow.
Curent Assets a/c_______________Dr.
To Cash a/c
it means that there is cash outflow.
Reverse entry in the case of inflow..
Similarly in case of current liabilities:
Cash a/c_________________________Dr.
To Current Liabilities a/c
it means that there is cash inflow.
Reverse entry in the case of outflow.
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