Differece between cash loss and book loss ? If anyone has exact defination pls forword me in vikaslalp @ gmail.com
3 Replies
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 09 October 2009
There is no definition it is understood as book loss includes non cash items like depreciation but cash loss is the actual loss on account of pure cash transaction
Varun Malhotra
(Chartered Accountant)
(207 Points)
Replied 11 October 2009
Books loss is loss reported as per your books of accounts, which is after providing for non-cash expenditures like depreciation/amortization, provisions etc.
Whereas cash loss is generally perceived to be cash used in operating activities (negative cash flows from operating activities). Cash loss is computed after adding back all non-cash expenditure/income to book loss/profit, then adjusted for increase/decrease in working capital. If after making above adjustments resulting amount is negative then its cash loss. It means an entity is not generating positive cash flows from its operations. Reasons for negative cash flows may be result of low profit margins on sale, huge fixed expenses, booking of sales without corresponding realisation of debtors during the year, funds blocked in idle inventory ( due to high levels of production but no sale).
anusha
(Article Assistant)
(21 Points)
Replied 24 July 2012
Hi,
Please tell me Exact definition for cash losses.
please give some examples also
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