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Timely Investments: As the inflow and outflow of cash is on time, you are left with adequate free and liquid finances, which you may invest in time-bound instruments and securitiesOutside investor need to know the working capital as they will evalute the feasibility and capibility to repay the credit extended to the organization .In order to offers bank loan to Al Saad in case they need additional capital to keep their current business afloat . Problem worksheet 4.7 Salary Expenses 875,000 Cash 875,000 ( Accured Salary ) Cash 4,800,000Revenue4,800,000( Revenue Accured) Total Salary = 875 ,000 + 15,000 = 890,000Total revenue = 480,000 + 100,000 = 490,000Rent Accured 100,000Rent 100,000Salary Expense 15,000
Service Revenue 150,000 The net result for salaries expense is the same regardless of whether we reverse or not. That's on 1/10, a cash amount of $40,000 was paid to cover salaries to date. The net result for rent revenue is the same regardless of whether we reverse or not. That's on 1/15, $250,000 of cash was collecte to offset rent revenue to date.