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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Accrual base and Cash flow statements
Dear sir,
if i use an accrual base of accounting and have lots of receivables that may be received in the next year, and have paid lots of suppliers that were relate to last year, isn’t there any impact on cash flow for current year??
Of course there is
The statement is titled “Statement of Cash Flows” and you’ve just been paying and receiving cash. So that cash paid and received is reflected within that statement
I believe that what you are asking is “is there any impact on a Statement of Cash Flows to reflect money received in advance from customers and money paid in advance to suppliers?”
Well, yes, there is
These receipts and payments will be double entered from the cash account to the receivables and payables balances and we consider, within the operating activities section of the Statement of Cash Flows, the movement in the working capital elements
In addition, when considering these movements in working capital, we include prepayments within the receivables figures and accruals (not tax, interest nor dividends) within the payables figures
Does that make it any easier for you?