Virginia Tutoring Programme - VTP

Going through each Cash Effect.

CASH EFFECT FROM OPERATING ACTIVITIES

*Operating Activities are the main income earning of a company.

*Examples are :
1) Buying and Selling Stock
2) Paying Creditors
3) Receiving Payment from Debtors
4) Paying all the Expenses e.g wages, water, motor vehicle expenses, etc
5) Paying SARS the Tax due
6) Paying Shareholders a Dividend

* DEPRECIATION Expense is a NON - CASH item that reduces profit, but DOES NOT IMPACT CASH FLOW. Hence, IT IS ADDED BACK.

*INTEREST and TAX cash flows will need to be DEDUCTED if they are to be treated as OPERATING CASH FLOWS