Transactions not influencing Fund (Working Capital) - illustrations |
 |
|
Transactions not influencing Fund (Working Capital) - illustrations |
| Balance Sheet of M/s __ as on 30th June __ | |||
|---|---|---|---|
| Liabilities | Amount | Assets | Amount |
| Non-Current Liabilities Current Liabilities | 89,00,000 15,00,000 | Non-Current Assets Current Assets | 80,00,000 24,00,000 |
| 1,04,00,000 | 1,04,00,000 | ||
From the above balance sheet,
| Working Capital | = | Current Assets - Current Liabilities |
| = | 24,00,000 - 15,00,000 | |
| = | 9,00,000 | |
| (Or) | = | Non-Current Liabilities - Non-Current Assets |
| = | 89,00,000 - 80,00,000 | |
| = | 9,00,000 |
An accounting transaction will not influence the fund or working capital when it brings about a change in
| Dr. Creditor a/c Cr. Cash/Bank a/c | Current Liability Current Asset | Decrease Decrease |
After taking into account the affect of the above transaction,
| Current Assets (Changed) | = | Current Assets (old) - Decrease |
| = | 24,00,000 - 50,000 | |
| = | 23,50,000 |
| Current Liabilities (Changed) | = | Current Liabilities (old) - Decrease |
| = | 15,00,000 - 50,000 | |
| = | 14,50,000 |
| Working Capital (Changed) | = | Current Assets (Changed) - Current Liabilities (Changed) |
| = | 23,50,000 - 14,50,000 | |
| = | 9,00,000 |
There is no change in working capital.
| Dr. Fixed Asset a/c Cr. Debentures a/c | Non-Current Asset Non-Current Liability | Increase Increase |
After taking into account the affect of the above transaction,
| Non-Current Assets (Changed) | = | Non-Current Assets + Increase |
| = | 80,00,000 + 4,00,000 | |
| = | 84,00,000 |
| Non-Current Liabilities (Changed) | = | Non-Current Liabilities (old) + Increase |
| = | 89,00,000 + 4,00,000 | |
| = | 93,00,000 |
| Working Capital (Changed) | = | Non-Current Liabilities (Changed) - Non-Current Assets (Changed) |
| = | 93,00,000 - 84,00,000 | |
| = | 9,00,000 |
There is no change in working capital.
| Dr. Cash/Bank a/c Cr. Debtors a/c | Current Asset Current Asset | Increase Decrease |
After taking into account the affect of the above transaction,
| Current Assets (Changed) | = | Current Assets + Increase - Decrease |
| = | 24,00,000 + 1,00,000 - 1,00,000 | |
| = | 24,00,000 |
| Working Capital (Changed) | = | Current Assets (Changed) - Current Liabilities |
| = | 24,00,000 - 15,00,000 | |
| = | 9,00,000 |
There is no change in working capital.
| Dr. Creditors a/c Cr. Bills Payable a/c | Current Liability Current Liability | Decrease Increase |
After taking into account the affect of the above transaction,
| Current Liabilities (Changed) | = | Current Liabilities + Increase - Decrease |
| = | 15,00,000 + 48,000 - 48,000 | |
| = | 15,00,000 |
| Working Capital (Changed) | = | Current Assets - Current Liabilities (Changed) |
| = | 24,00,000 - 15,00,000 | |
| = | 9,00,000 |
There is no change in working capital.
| Dr. Preference Shares a/c Cr. Debentures a/c | Non-Current Liability Non-Current Liability | Decrease Increase |
After taking into account the affect of the above transaction,
| Non-Current Liabilities (Changed) | = | Non-Current Liabilities + Increase - Decrease |
| = | 89,00,000 + 3,50,000 - 3,50,000 | |
| = | 89,00,000 |
| Working Capital (Changed) | = | Non-Current Liabilities (Changed) - Non-Current Assets |
| = | 89,00,000 - 80,00,000 | |
| = | 9,00,000 |
There is no change in working capital.
| Dr. New Asset a/c Cr. Old Asset a/c | Non-Current Asset Non-Current Asset | Increase Decrease |
After taking into account the affect of the above transaction,
| Non-Current Asset (Changed) | = | Non-Current Assets + Increase - Decrease |
| = | 80,00,000 + 2,40,000 - 2,40,000 | |
| = | 80,00,000 |
| Working Capital (Changed) | = | Non-Current Liabilities - Non-Current Assets (Changed) |
| = | 89,00,000 - 80,00,000 | |
| = | 9,00,000 |
There is no change in working capital.
Non Cross transaction is an identification relevant to the topic funds flow analysis. Such transactions would not result in a change in fund or working capital.
|