Discussion:Cash flow statement for cash accounting

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Discussion Forum Index --> Accounting Questions --> Cash flow statement for cash accounting

Nshnider (talk|edits) said:

23 April 2013
Client runs QB I/S on cash bases. I assume the B/S changes are irrelevant But when they run a Cash I/s and then an accrual I/S the difference in the NI is less than $1K. then when you use the accrual I/S and do a statement of cash flow, the cash change is significant over 25K from operations. any explanation

Captcook (talk|edits) said:

23 April 2013
I assume the B/S changes are irrelevant

My explanation is this assumption is incorrect.

Nshnider (talk|edits) said:

23 April 2013
if I/S is on a cash basis what is the relevance of the change in A/P and A/R to the cash used or not used. I can see the inventory and changes in other balance sheet accounts

Natalie (talk|edits) said:

April 25, 2013
If the QBs balance sheet run on a cash basis shows any balances in A/R, A/P or other prepaid, deferred or accrued liability accounts, then the P&L run on the cash basis is not truly cash basis.

UpstateCPA (talk|edits) said:

25 April 2013
I don't trust the QB "cash basis" report when the client has A/R & A/P in quickbooks. I always start with the accrual basis reports and back out the A/R and A/P with journal entries.

Nshnider (talk|edits) said:

26 April 2013
Thanks for your comments but my issue is that if you run the I/S on a cash basis, then the balance sheet A/P and A/R changes run on an accrual basis should not be added or subtracted from the NI of the cash basis I/S. do you agree?


Natalie (talk|edits) said:

April 26, 2013
It depends. The P&L run on the cash basis may not be truly cash basis. The way you can tell is if you run the balance sheet on the cash basis and have amounts left in A/R and/or A/P, it's not cash basis.

Another way to state that is if you have amounts in the balance sheet A/R and/or A/P accounts when it is run on the cash basis, then you SHOULD make adjustments to the cash-basis run P&L. If you don't, it won't be cash basis.

Nshnider (talk|edits) said:

27 April 2013

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