Friends please help with the following :
When we estimate the working capital requirement of a new company, while calculating creditors, we take into account raw material consumed + closing stock of raw materials in order to determine the amount of purchases during the year. But in ICAI study mat in Illutration Nos 5 and 8 (Page Nos 7.19 and 7.26 respectively of August 2010 (Reprint)edition) even though the question specifically mentions the company to be a new company, creditors has been calculated based on Raw Material consumed only, Closing stock of raw material has been ignored..... But in Illustration No 7 while calculating creditors they have considered the purchase during the year i.e. material consumed + closing stock..... Please explain Ill Nos 5 and 8... I cannot understand these problems... Thanks...
CAclubindia
