wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

Q54 cash flow Ts grewal. Why profit on investment (CR) not taken as non cash items.

Open in App
Solution

Dear Student,

As we know, only items given in adjustments have double/two effects and as the Capital Reserve (profit on sale of investment) is shown in the Balance Sheet it is to be recorded only once. The effect of profit on sale of investment is taken into account while preparing the Investment A/c. Therefore, it is not deducted from Net Profit before taxation and extraordinary items as a non-cash item.

Hope this answers your query.
Keep posting!!


flag
Suggest Corrections
thumbs-up
0
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Introduction to Profitability Ratios
ACCOUNTANCY
Watch in App
Join BYJU'S Learning Program
CrossIcon