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Kim Smith.
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Noah098
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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?
Kim Smith
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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.
Noah098
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Got it ma’am thank you!
Also ma’am can we use short forms such as “SCF”, “SPL” and “SFP” in the AAA exam?
Kim Smith
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See https://opentuition.com/topic/can-we-use-pv-fv-ly-ye-in-paper – same principle applies to all ACCA exams.
Noah098
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