[SOLVED] Question 7.6 (Estimating cash flows from operating activities)

Question 7.6 (Estimating cash flows from operating activities)
It is difficult in practice for financial statement readers to calculate cash flows from other information in the financial statements. To do so requires an advanced understanding of financial accounting. Where a subsidiary has been acquired or disposed of during the reporting period, this needs to be allowed for in reconstructing the affected consolidated balances.
In most cases there will be insufficient data to correctly reconstruct the notional consolidated accounts. In the case of trade receivables, the closing balance will include the amount of goods and services tax owing (as well as amounts recognised by the entity as revenue). Balances of trade receivables commonly include amounts denominated in foreign currencies and will thus commonly be adjusted for movements in exchange rates. Additional factors that can affect the balances of trade receivables include returns, discounts and allowances (such as prompt payment discount). It would be difficult for the analyst to obtain and process all of this information.

Copyright By Assignmentchef assignmentchef

CS: assignmentchef QQ: 1823890830 Email: [email protected]