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Chapter 20: Statement of Cash Flows, demand deposits usually refer to…

- - - - A = L + OE
        Cash + Other assets = L + OE
        Cash = L + OE - other assets
        ∴ Movement in cash = Movement in non-cash items
- - - - Cash effects of non-operating items, tax, dividends
        
        examine both the SOPL and SOFP items if applicable to determine cash flow
        To calculate an item:
        Opening balance + expense - Closing balance
  - - - Non-operating items
        • Non-operating items of income and expenses need to be reversed in calculating the operating cash flow
        • SUBTRACT non operating INCOME items
        • ADD non operating EXPENSE items
        Working capital changes
        • (INCREASE)/DECREASE in Inventory
        • (INCREASE)/DECREASE in Receivables
        • INCREASE/ (DECREASE) in Payables
        • Working Capital is Current Assets - Current Liabilities
        To calculate the increase/decrease in working capital:
        Closing balance - Opening Balance ← get values from SOFP
        If answer is positive, there has been an INCREASE in the value
        If answer is negative, there has been a DECREASE in the value