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cash flow statement- discount effect
what is the effect of discount paid and received in cash flow statement
Replies (12)
How do you pay and receive discount in cash it is either deducted from sale or purchase value right?
If this involves any cash movement - It should
@ 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)
So you mean you book gross sales and debit discount separately? is that what you mean
yes discount received , discount paid, sales and purchases all separate
Ha yes then discount paid is added back and discount received is deducted to arrive at cash figures
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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.
where as cash discount received from suppliers is non cash income, so add net profit to arrive operating profit before working capital changes.
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
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.
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.
leave cash flow statement in option
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.
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.
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