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Cash flow statement
why additonal General reserve of C.Y is add back in operating activity??
Replies (3)
Because it is debited from profit and we have to show actual profit before any adjustments(all dep etc) and then cash inflow outflow can be determined as per indirect method.
general reserve deducted from profit and loss is a appropriation of profit.. it doesnt involve any cash movement.. hence should be added back to ascertain actual cash flow from operation.
thnks both of u..
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