Piggott & Co, a sole trader business, made a net cash inflow from operating activities of £72 200 in its financial year ended 31 December 20X7.During the 20X7 financial year, the business managed to decrease its long-term liability to the bank from £100 000 to £80 000.Loan interest of £6000 was paid, and John Piggott, the proprietor, drew £18 000 from the business for his own personal use.There were no other relevant transactions. What was Piggott's net cash inflow for the year ended 31 December 20X7?
A)£46 200
B)£28 200
C)£68 200
D)£40 200

Question

Quizplus · Accepted Answer

The net cash inflow for the year can be calculated by starting with the net cash inflow from operating activities (£72,200), then subtracting the cash outflows for loan repayment (£20,000, which is the reduction in long-term liability from £100,000 to £80,000), loan interest (£6,000), and drawings by the proprietor (£18,000). This results in a net cash inflow of £28,200 (£72,200 - £20,000 - £6,000 - £18,000).

Piggott & Co, a Sole Trader Business, Made a Net