Referring to MY POST, I am hereby starting this thread for PCC/IPCC – Financial Management - Cash Flow So friends, Lets Start……
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G. K.'s Way to Learn - Cash Flow
Replies (1)
Simple way to learn Cash Flow :
Jus follow these steps :
1. Notice the dates of balance shet given in ques
2. Prepare statement of cash & cash equivalents in which we will consider three items:
- Cash
- Bank
- Short Term Investments
3. Prepare all ledger accounts which are given in ques and post journal enteries of the adjustments, if any except the following accounts:
- Direct Method
- Cash & Cash Equivalents
- Stock
- Indirect Method
- Cash & Cash Equivalents
- Stock
- Current Assets & Current Liabilities
4. Prepare P & L account
5. Pick up bank transactions and post them in cash flow statements categorized as Operating, Financing & Investing activities in the following format :
Operating Activities
- Direct Method
|
Cash Received from Customers |
|
|
|
- Cash Sales |
X |
|
|
- Debtors Collection |
X |
X |
|
Cash paid to suppliers & employees |
|
|
|
- Cash Purchases |
X |
|
|
- Cash paid to suppliers |
X |
|
|
- Overhead expenses |
X |
|
|
- Administration expenses |
X |
|
|
- Selling & Distribution expenses |
X |
(X) |
|
Cash generated from operations |
|
X |
|
(-) Tax paid |
|
(X) |
|
Cash flow before extra – ordinary items |
|
X |
|
Cash flow from/used in operating activities (A) |
|
X |
- Indirect Method
|
Net Profit before tax & EI |
|
X |
|
Adjustments |
|
|
|
- Non Cash items |
X |
|
|
- Non Operating Items |
X |
X |
|
Operating profit before working capital changes |
|
X |
|
(-) Increase in current assets |
|
(X) |
|
(+) Decrease in Current assets |
|
X |
|
(+) Increase in current liabilities |
|
X |
|
(-) Decrease in current liabilities |
|
(X) |
|
Cash generated from operations |
|
X |
|
(-) Tax paid |
|
(X) |
|
Cash flow before extra – ordinary items |
|
X |
|
Cash flow from/used in operating activities (A) |
|
X |
Investing Activities
|
Sale of fixed assets / Investments |
X |
|
Purchase of fixed assets / investments |
(X) |
|
Interest / Dividend Received |
X |
|
Cash flow from / used in investing activities (B) |
X |
Financing Activities
|
Issue of Equity / Pref. share capital |
X |
|
Redemption of Pref share capital / debt |
(X) |
|
Interest / Dividend paid |
(X) |
|
Cash flow from / used in financing activities (C) |
X |
|
A + B + C |
X |
|
(+) Opening balance of cash & cash equivalents |
X |
|
Closing balance of cash & cash equivalents |
X |
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