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The logic behind prepayment and accruals in Cash Flows

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › The logic behind prepayment and accruals in Cash Flows

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  • March 17, 2015 at 12:24 pm #232768
    Anonymous
    Inactive
    • Topics: 43
    • Replies: 124
    • ☆☆

    Hi Mister,

    May I please ask the deduction/add back logic for prepayments/accruals with regard to cash flow reconciliation in terms of increase/decrease?
    Thank you.

    March 18, 2015 at 12:17 pm #233135
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    Where we have a prepayment or an accrual, that’s telling us that the income or expense is not yet received / paid and, as such, needs to be adjusted in a statement that tries to show the flow of CASH

    Does that explain it for you?

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