Skip to main content
E
EBFinancials
January 15, 2019

Statement of Cash Flows question

  • January 15, 2019
  • 1 reply
  • 0 views

1. If I enter vendors bills as checks instead of including them in the Accounts Payable line item of the statement- Does it mean they go into the expenses portion of the Net income (loss)?
2. At the point of time of the Statement of cash Flows there is a vendor bill that is unpaid and on hold due to legal dispute that is underway but still not resolved - How do I account for it in the Statement of cash Flows

    1 reply

    A
    Anonymous
    January 15, 2019

    Assuming that you are using accrual accounting (not cash basis)

    Yes if you 'write cheque' to a vendor for an expense item then it goes straight into expenses.

    Unpaid vendor bills also create expenses, but in the cashflow statement they are also included in the AP changes which offsets the expense. 

    E
    EBFinancialsAuthor
    January 15, 2019

    @197869
    So you are saying that the unpaid bill should be included/recorded in both the expenses (in the Net Income (loss)) and the A/P accounts?
    In the A/P should it be then as a positive effect on the cash situation (increase)?

    A
    Anonymous
    January 15, 2019

    Correct - a net increase in AP means you paid less to vendors - which is a positive change in the cash-on-hand.  This is the cash-flow statement presentation that is most commonly used with accrual accounting (called 'indirect') and QB follows this system.

    The alternate is 'direct' presentation - which converts a set of accrual accounts into what you would get from a 'cash based' accounting.  QB doesn't offer that CF format for accrual accounting - but if you use 'cash basis' accounting in QB you get that result by default.

     

    Terms & ConditionsAccessibility statement