05 November 2007
Can anybody tell me:?? Can we reconcile Cash Flow with P&L or vise versa.
Because in Cash Flow we consider only actual inflow/outflow of the cash/bank, while in case of P&L, we show our expenses on accrual basis. So how can we reconcile cash flow with P&L??
You must have computed profit made during the year i.e. increase in P&L account balance and Add back Provision for taxation Proposed Dividend Transfer to Reserves
You will arrive at Net Profit before taxation taken to cash flow
This will apply cash flow in operating activities in Indirect Method.
The basic proble is that you are having Cash Flow Surplus and P&L negative. It can be so that Operating Activities is negative and surplus is due to Financing and Investing Activities or interchange of any items.
I took too long to explain but as a Professor I take time.
CAclubindia
