Profit Calculation from Cash Flow
Profit can be calculated from the cash flows by deducting the
depreciation expenditure or other non cash expenditure and adding non cash
profit items i.e. capital gain on disposal of assets.
Example of Profit Calculation from
Cash Flow
ABC & Company noted the following cash flow during the
year. Other information about depreciation
& capital gains.
|
Cash Flows
|
$ 500
|
|
Depreciation
|
$ 50
|
|
Capital Gain
|
$ 70
|
|
|
|
Calculate the profit for the year?
Solution
|
Cash Flows
|
$ 500
|
|
Less : Depreciation
|
($ 50)
|
|
Add : Capital Gain
|
$ 70
|
|
Profit for the year
|
$ 520
|
