If there are creditors of Rs 80,000 and we had received a discount of Rs 2,000(by paying them),then what will be the treatment in cash flow statement ?
Dear Student
If there are creditors of 80,000 and we have received a discount of 2,000 means we have paid Rs 78,000 to them. Therefore in cash flow statement as per :
1. Direct method - Rs 78,000 payment shall be shown as payment ot creditors in operating activities.
2. Indirect method - In this method we need closing balances, so this information would not be used in this method as Discount received shall be included in Net profit and payment to creditors shall be adjusted through closing balances.
Regards
If there are creditors of 80,000 and we have received a discount of 2,000 means we have paid Rs 78,000 to them. Therefore in cash flow statement as per :
1. Direct method - Rs 78,000 payment shall be shown as payment ot creditors in operating activities.
2. Indirect method - In this method we need closing balances, so this information would not be used in this method as Discount received shall be included in Net profit and payment to creditors shall be adjusted through closing balances.
Regards