FRA Reading 34 Understanding Cash Flow Statement:
For Question 37 does anyone know why the answer does not incorporate COGS ($270 million) as part of cash paid to suppliers?
The answer only uses Purchases and deducts the Increase in Accounts Payable (ignoring COGS).
I may be overlooking something here but any input is much appreciated..Thanks作者: robjames1984 时间: 2013-4-8 22:28
Purchases = COGS + Increase in Inventory
So if you have already been given Purchases, all you need to do is account for accounts payable and that should be it.作者: DarienHacker 时间: 2013-4-8 22:29
anish is right just think, I paid cash for all these purchases, except for what i put on credit, which is accounts payable.
If they didn’t give you purchases, and just gave you COGS & the increase in inventory, then just think: ok, what did I buy must have been everything I sold (COGS) plus this additional inventory that I have sitting around that I bought but didn’t sell yet.
Let me know if that doesn’t make sense
