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We are Sharing With You What is behind 3 Statements Forecast? . So kindly Check Out our http://www.castudynotes.com website and ALL the Best for Your upcoming Interviews.

CA STUDY NOTES

What is behind 3 Statements Forecast?

Here is some of puzzle pieces.

✅ 𝗥𝗲𝘃𝗲𝗻𝘂𝗲 𝗦𝗰𝗵𝗲𝗱𝘂𝗹𝗲:
Historical data
Trend analysis
Time series
Expert analysis

✅ 𝗖𝗢𝗚𝗦 & 𝗚𝗿𝗼𝘀𝘀 𝗽𝗿𝗼𝗳𝗶𝘁
Gross margin
Pricing trends
Supply chain
Scrap, shortages

✅ 𝗦𝗮𝗹𝗮𝗿𝗶𝗲𝘀
Headcount forecast
Annual increase
Bonus scheme
ESOP

✅ 𝗗𝗲𝗯𝘁 𝘀𝗰𝗵𝗲𝗱𝘂𝗹𝗲
Existing loan schedules
New loans plan
Short vs long term

✅ 𝗡𝗲𝘁 𝘄𝗼𝗿𝗸𝗶𝗻𝗴 𝗰𝗮𝗽𝗶𝘁𝗮𝗹
AR & DSO
Inventories & DIO
AP & DPO

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Accruals vs. Provisions Key Difference:-

Accruals:

• Recognition of expenses or revenues earned but not yet invoiced or paid
• Match revenue and expenses in the same period (matching principle)
• Examples:
• Accrued salaries and wages
• Accrued interest expense
• Accrued rent
• Accounting entry:
  Debit (Expense)
  Credit (Accrued Expense)

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Provisions:

• Recognition of estimated expenses or losses likely to occur
• Based on past experience, probability, or future events
• Examples:
• Provision for bad debts
• Provision for warranty claims
• Provision for income taxes
• Accounting entry:
  Debit (Expense)
  Credit (Provision)

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Key Differences:

1. Timing:
   Accruals relate to existing transactions,
   while provisions anticipate future events.
2. Certainty:
   Accruals are more certain,
   whereas provisions involve estimation and uncertainty.
3. Purpose:
   Accruals match revenue and expenses,
   while provisions recognize potential losses or expenses.
4. Accounting treatment:
   Accruals are typically expensed immediately,
   whereas provisions may be released or adjusted over time.

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Other Similar Concepts:

1. Reserves: Long-term provisions for future expenses or losses (e.g., pension reserves).
2. Contingencies: Potential losses or gains with uncertain outcomes (e.g., lawsuits).
3. Deferred expenses: Expenses paid in advance, amortized over time.

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