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moritz m/j’20

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › moritz m/j’20

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by Kim Smith.
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  • November 22, 2021 at 2:38 am #641275
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    ma’am I wanted to understand from you how is the following procedure relevant to cash flow forecast?

    “Confirm the consistency of the accounting policies used in the preparation of the forecast financial statements with those used in the last audited financial statements.”

    from the understanding I developed during my prep for FR andSBR, i believe that accounting policies and estimates are not relevant to cash flow forecast, they just affect the way profits are recorded. cash flows remain absolutely unbiased and unaffected from acc policies/estimates.

    your thoughts?

    November 22, 2021 at 7:50 am #641286
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8304
    • ☆☆☆☆☆

    I suggest it is the consistency of the assumptions underlying the accounting policies that should be considered. E.g. if accounting policy for revenue recognition is based on performance over time – the cash flow forecast should assume recognition at a point in time (since this would affect the timing of cash flow). Or if recognition of credit losses includes 5% general allowance for trade receivables, the cash flow forecast should have only 95% revenue as cash received.

    November 22, 2021 at 8:57 am #641292
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    Got it ma’am thank you!

    Also ma’am can we use short forms such as “SCF”, “SPL” and “SFP” in the AAA exam?

    November 22, 2021 at 9:10 am #641294
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8304
    • ☆☆☆☆☆

    See https://opentuition.com/topic/can-we-use-pv-fv-ly-ye-in-paper – same principle applies to all ACCA exams.

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