Define self liquidating premium
The residual represents the gross change in fixed assets for the period.If the residual is positive, it represents a use of funds; if it is negative, it represents a source of funds.b) Cash equivalents: Short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
The aim of a cash flow statement should be to assist users: The statement therefore shows changes in cash and cash equivalents rather than working capital.
Indirect method cash flow statement Figure 3.1 shows a pro forma cash flow statement.
Figure 3.1 Pro forma cash flow statement a) Cash in hand and deposits repayable on demand with any bank or financial institution.
It can be positive, or negative, which is obviously a most undesirable situation.
The chapter develops the concept of cash flow and then shows how the funds can be used in the business.