Accountancy, asked by rotrirajesiannieca, 1 year ago

what is the treatment of capital reserve in CFS ?

Answers

Answered by sharinkhan
0
Cash flow statement is treated in two ways.
Increase in balance of cpital reverse and decrease in balance of capital reverse.
It is always added to net profit.
Answered by sawakkincsem
2

Increase in balance and decrease in balance of capital reserve are two situations which need to be treated.  

Increase in balance of capital reserve is related to profit/gain on the sale of fixed assets this will not affect the statement in an unusual manner it will show the profit as deduction under operating activity and as a component of sale proceeds under Investing activity. 

Decrease in balance of capital reserve is related to writing off capital losses against the capital profit. This does not change the cash balance so it doesn't affect the Cash Flow Statement.

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