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Cash flow statement
What is the treatment, if expenses of last year paid in current year in cash flow statement.
Replies (8)
Quick Summary
If they were accrued last year into payables, they were already in the Cashflows of last year. Payables go into working capital changes on OCF
If this was payables expenses means wages, salary, rent, tax etc. then you can show it as expenses in current year in the following month from the month when it was accrued or if the expenses are not paid in last year and paid in current year then you can show it as
prior period expenses
prior period expenses
Forgot .....then this year cash flow, the cash and equivalents balance will reduce to get the main cash status after three activities.
Okk thanks, and what is the treatment of investment in cash of switching
What is the meaning of switching?
Anyways all investments go through CF from Investment activities irrespective of cash or bank because the cash and equivalents holds all payments made and cash received on receipts adjustments.
Switching mean no bank or cash involved just switch one investment to other for example kotak equity switch to axis corporate fund
Txs for clarity, how ever you like to switch you can do it as long as you recognise your investments in the balance sheet. All non current assets which includes investments fall under investing activities.
Accrued expenses paid effect in CFS
1. If Indirect method
Adjustment in operating activity
Decrease in Liability
so deduction in working capital change
2 But if Direct method
directly deducted
1. If Indirect method
Adjustment in operating activity
Decrease in Liability
so deduction in working capital change
2 But if Direct method
directly deducted
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