Cash Flow Query

dear gaurav,  i wl ask u a simple question and u wl get the answer.

suppose u hv some stock n u sell it. now wot does it mean?

it means the stock u had u sold n u are receiving cash for it.... thus there is inflow of cash. cash is coming in ur hand n it results in inflow.

for ur 2nd question the j.entry is

purchases a/c  dr 10000

TO EQuity share cap A/C. 10000

In cash flow statement only items effectinf flows of cash are represented.

When shares are issued for stock, There is no effect on cash hence this not shown in Cash flow.

 Thnx Hrithvik .. I Have understood the first part .. bt shoudn't Purchase of Stock By issue Of Shares Be Added BAck To Net Profit to get Adjusted Net Proft because it is a non- cash expense .... ??

Ans to 2nd question _only 1effect

while calculating cash from opertion

amt of Decrease in stock =

= (op.stock)100000 - [(cl.stock)75000 - (non cash purchase of stock)10000]

=100000 - 65000

=35000

"bt shoudn't Purchase of Stock By issue Of Shares Be Added BAck To Net Profit to get Adjusted Net Proft because it is a non- cash expense .... ??"

exactly ... could someone explian it??

opening stock                                             100000

add:-purshase                                               10000        

less:- closing     stock                                   75000       

net   cash in -  fiow                                         35000        

            net cash out flow  is   nil  becouse --

                                          purchase a/c     Dr.

                                                    to equity share capital a/c

                  (equity shares issue for purchase of goods other then cash)              

 Thnx ravi sir .. I think that makes sense ..