Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 12 - Statement of Cash Flows - Questions: 14

Answer

It is said that the president of "S" company is puzzled due to the following reason. 1. Net loss of 800000 dollars during the last year 2. Cash increased 300000 dollars a)Reason for Net Loss b) Reason for cash increased

Work Step by Step

a) The company experienced such net loss as because the expenditure had exceeded their income during the last year more over the increase in cash due to loan or increase in creditor due to which the company had to pay interest over it which in return increases the expenditure of the company resulting huge loss. b) The reason that there is increase in cash by 300000 dollars as because the company may have taken loan or there is increase in creditors which in result leads to increase of cash as it is inflow of cash.
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