working cp mgt
This query is : Resolved
03 April 2010
can u please tell how we calculate debtors in working capital mgt ,,sometimes it hs been done on cost & sometimes on selling price,,,& how we treat depriciation,,,,it should not be included while caculting overhead expenses but wat about other items lie raw mat , fg etc...
& more thing cash cost tecnique...pls help
& more thing cash cost tecnique...pls help
Rahul Gupta
(Expert)
04 April 2010
Debtors represents the amount you owns from from your customers. It represents the amount you will receive from your customers.
Whether it will be the cost price or the sales price, it doesn't matter, if credit sales is at sale price, then sales prices is included in debtors, and if credit sale is made at cost, then cost price will be included in debtors. In nutshell, the amount receivable from your customer is included in debtors.
For depreciation, it doesn't effect directly in the calculation of working Capital. Since it is charged on fixed assets and is accounted as expense in in P&L account and is deducted from the amount of fixed assets.
For raw material, finished goods , they are the part of the stock and valuation of stock is done at lower of cost or selling price. Depreciation is not affecting them at all.
Whether it will be the cost price or the sales price, it doesn't matter, if credit sales is at sale price, then sales prices is included in debtors, and if credit sale is made at cost, then cost price will be included in debtors. In nutshell, the amount receivable from your customer is included in debtors.
For depreciation, it doesn't effect directly in the calculation of working Capital. Since it is charged on fixed assets and is accounted as expense in in P&L account and is deducted from the amount of fixed assets.
For raw material, finished goods , they are the part of the stock and valuation of stock is done at lower of cost or selling price. Depreciation is not affecting them at all.
04 April 2010
actually i am doing working cap estimation ..pcc level,,,(may 2010 attempt)... i did this chapter ,,& i observed,,,,tht while calculating current assets,,,debtors r multiplied by cost or selling price,,,it hs not been mentioned in the question tht credit sales is on sp or cp....so r we supposed to assume tht it hs been done on sp or cp?????????
Rahul Gupta
(Expert)
04 April 2010
My view is calculate at selling price because the goods are sold at sale price and so the amount receivable from debtors should be at sales price.
04 April 2010
thnks i m doing it on sp,,,but rp rustogi and suggested answers did it on cp..tht'why got confused,,,,anyways thnku...
& sorry for bothering u so much,,,can u tell me from where i can get the the Supplementary Study Paper which hs Budget Notifications issued on 07.07.2009 ...
& sorry for bothering u so much,,,can u tell me from where i can get the the Supplementary Study Paper which hs Budget Notifications issued on 07.07.2009 ...
Rahul Gupta
(Expert)
04 April 2010
I am not sure for the papers. However, You can check the files section for the same.
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