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Cash flow statement

Kashyap Halani ( student) (69 Points)

22 June 2014

why additonal General reserve of C.Y is add back in operating activity??

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3 Replies

rajeev (nnnone) (224 Points)
Replied 22 June 2014

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.

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Dev (Article Trainee.) (613 Points)
Replied 22 June 2014

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.