24 June 2011
Question Ms Janie, a client who has traded as a hardware merchant for the last five years, has told you that she finds difficulty in understanding the draft profit and loss account for the year ended 31 December 2010 which has been prepared by your assistant. Ms Janie’s main concern is that, although the accounts show a profit, the bank overdraft at 31 December 2010 was significantly higher than it was a year earlier. Required: Write a report, indicating your response and opinion to Ms Janie
24 June 2011
this means that though the company is making book profits ,it is unable to generate cash profits. than discuss the need of cash flow statement besides profit and loss a/c. in a nutshell companies can make huge profits,but in reality these are not earning proper cash.
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