Question

Working capital accounts are current assets and current liabilities.

Of the 13 accounts listed in the question, 7 are working capital accounts, some involving an inflow of cash and some involving an outflow of cash. Make a list of the 7 working capital accounts and subdivide and subtotal your list into two categories, the number of cash inflows and the number of cash outflows during the year. (Hint - the grand total is a $12,000 outflow)

EXERCISE 4: WORKING CAPITAL ACCOUNTS For the following accounts, identify the working capital accounts and prepare the adjustments in non-cash working capital accounts statement. Accounts Trade receivables Non-current assets Inventories Prepaid expenses Accumulated depreciation Dividends Trade and other payables Revolving loan Mortgage payable Accrued expenses Share capital Short-term borrowings Profit for the year This Year $230,000 550,000 350,000 50,000 210,000 40,000 240,000 90,000 120,000 20,000 50,000 82,000 48,000 Last Year $210,000 450,000 290,000 40,000 180,000 32,000 190,000 100,000 110,000 30,000 40,000 34,000 39,000

Answer 1

Sl. No.	Accounts	This year	Last Year	Nature of account		Change ( Outflows are shown as minus)
		A	B			$
	Number of cash outflows
1	Trade receiables	2,30,000	2,10,000	Current Assets	B-A	-20,000
2	Inventories	3,50,000	2,90,000	Current Assets	B-A	-60,000
3	Prepaid expenses	50,000	40,000	Current Assets	B-A	-10,000
4	Revolving loan	90,000	1,00,000	Current Liabilities	A-B	-10,000
5	Accrued expenses	20,000	30,000	Current Liabilities	A-B	-10,000
	Total					-1,10,000
	Number of cash inflows
6	Trade and other payables	2,40,000	1,90,000	Current Liabilities	A-B	50,000
7	Short term borrowings	82,000	34,000	Current Liabilities	A-B	48,000
	Total					98,000
Working Capital (Outflow) ($)	-12,000