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cash flow statement- discount effect

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STUDENT
262 Points Posted on 28 November 2018
what is the effect of discount paid and received in cash flow statement
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On 28 November 2018 at 12:06 Report
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Student
3549 Points Posted on 28 November 2018
How do you pay and receive discount in cash it is either deducted from sale or purchase value right?
15 Reply
On 28 November 2018 at 12:21
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SME - Finance
758 Points Posted on 28 November 2018
If this involves any cash movement - It should
2 Reply
On 28 November 2018 at 12:29
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STUDENT
262 Points Posted on 28 November 2018
@ Hitesh exactly my point. since there is no "cash" involved, shouldn't we deduct it from the profit considered in preparation of cash flow statement (indirect method)
9 Reply
On 28 November 2018 at 12:44
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Student
3549 Points Posted on 28 November 2018
So you mean you book gross sales and debit discount separately? is that what you mean
15 Reply
On 28 November 2018 at 12:46
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STUDENT
262 Points Posted on 28 November 2018
yes discount received , discount paid, sales and purchases all separate
9 Reply
On 28 November 2018 at 12:49
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Student
3549 Points Posted on 28 November 2018
Ha yes then discount paid is added back and discount received is deducted to arrive at cash figures
15 Reply
On 28 November 2018 at 12:52
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Accountant
4 Points Posted on 28 November 2018

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On 28 November 2018 at 17:44
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teaching
2046 Points Posted on 29 November 2018
cash discount allowed to customer is non cash expenditure, so deduct from net profit to arrive operating profit before working capital changes.
where as cash discount received from suppliers is non cash income, so add net profit to arrive operating profit before working capital changes.
7 Reply
On 29 November 2018 at 12:08
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STUDENT
262 Points Posted on 29 November 2018
Bank FDS have been shown as part of cash and cash equivalents then what will be the effect of FDR Interest income, interest accrued, new fd made and fd matured in cash flow statement
9 Reply
On 29 November 2018 at 12:57
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teaching
2046 Points Posted on 29 November 2018
if it is investment company, interest is considered as operating income.
if not investment company, interest from those investments is non operating income. in this case interest from investment is deduct from net profit to arrive operating profit before working capital changes and
cash inflow under investing activities.
7 Reply
On 29 November 2018 at 13:33
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Assistant
1095 Points Posted on 29 November 2018
leave cash flow statement in option
5 Reply
On 29 November 2018 at 21:12
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teaching
2046 Points Posted on 29 November 2018
for new FD's and FD matured, need not reflect in cash flow just like cash deposited into bank and cash with drawn from bank.
i.e. on one end either cash and bank balance decrease then FD Bal will increase, where as on maturity either cash Bal or bank balance will increase.
7 Reply
On 29 November 2018 at 22:01


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