Cash flow statement
Note: the profit on the sale of fixed tangible assets (£100,000) was to be included in the income statement. I noticed that it was not included in the income statement.
Cash flows and retained earnings
Despite having retained earnings of £900,000 in the year ended 31st December, 2012, the company had a large bank overdraft. Retained earnings is the portion of the company’s profit that is not distributed. Profit considers that company’s revenues and expenses and does not consider whether the revenues or expenses are in cash. The cash flow statement includes cash items only. Thus, there is a difference ...