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Cash flow statement

Financial Management

Financial management , study material of ICAI , On page 9.52 of module 2 , illustration 8, in cash flow statement, 50 lakh is subtracted as cash required for increase in stock. Please explain why it is subtracted , as also adjustment is done in making entry in profit and loss account of 420 lakhs of material consumed in year 3 .

Anirved Rahatgaonkar

CA Inter

★ 0

16-May-24 08:46

Answers (2)

Best Answer

50 L is increase in stock. (In question they told that the closing stock is expected to go up by same amount as between year 1 and 2)(15L - 10L) Please refer working notes for material consumption (35% of sales)

Elavarasi Bojarajan

CA Inter

★ 46K+

16-May-24 12:52

Elavarasi Bojarajan

Increase in stock means increased outflow and hence a reduction in cashflow

Sriram Somayajula

Admin

22-May-24 11:18

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