Question

In: Accounting

How to know when will we incraese or decrease in account paybable and account receivable in...

How to know when will we incraese or decrease in account paybable and account receivable in cash flows ?

Solutions

Expert Solution

Cash flow Statement is nothing but the statement shows the in and out flow of the cash during the said period of the organisation.

In case of Accounts Payable -

When Accounts payable increases, the cash flow will be increased to the extent of increase in Accounts payable and cash flow will be decreased to the extent of decrease in accounts payable. It is because, when account payable increases it means that cash you need to pay has been saved without paying to the person and also when it decreases it means that you had paid cash from your hand so that your cash in hand or bank will be reduced.

In case of Accounts Receivable -

When Accounts receivable increases, the cash flow will be decreases to the extent of increase in Accounts Receivable and Cash flow will increase to the extent of decrease in Accounts Receivable. It is because, when Accounts Receivable increases it means that you didnt receive any cash that you required to receive and when it decreases it means that you have received cash during the period and so your cash in hand or bank increases.


Related Solutions

Which of the following reasons is NOT  consideredacceptable when examining the decrease in accounts receivable on...
Which of the following reasons is NOT  considered acceptable when examining the decrease in accounts receivable on the cash flow statement?More customers have failed to pay off their accounts compared to prior year.The company is collecting its accounting receivable faster.The company hired an employee dedicated to monitoring accounts receivable.Sales revenue decreased.
1. Why might a business prefer a note receivable to an account receivable, and how is...
1. Why might a business prefer a note receivable to an account receivable, and how is it impacting the uncollectible account?
please explain the nature of a note receivable? How is it different from an account receivable?...
please explain the nature of a note receivable? How is it different from an account receivable? How is interest calculated on a note receivable? What do we mean by the maturity value of a note receivable?
1. Which of the following results in a decrease in the investment account when applying the...
1. Which of the following results in a decrease in the investment account when applying the equity method? a. Net income of the investor b. Net income of the investee c. Unrealized gain on intercompany inventory transfers for the current year d. Dividends paid by the investor e. Purchase of additional common stock by the investor during the current year 2. Which of the following is a characteristic of a business combination that should be accounted for as a purchase?...
Net Income $5,000 Depreciation 2,500 increase in deferred tax liabilities 500 Decrease in account receivable   ...
Net Income $5,000 Depreciation 2,500 increase in deferred tax liabilities 500 Decrease in account receivable    2,000 increase inventories 9,000 Decrease in Account Payable 5,000 increase in accrued liabilities 1,000 increase in property and equipment 14,000 increase in short term notes   19,000 decrease in long term bonds 4,000 Use the information above to answer the questions below What is the net cash flow from operating activities What is the net cash flow from investing activities What is the net cash...
What is an account receivable, and how is it different from an account payable? Discuss some...
What is an account receivable, and how is it different from an account payable? Discuss some of the main accounting issues involved in accounting for accounts receivable?.
We know that sample statistics vary. How does a hypothesis test and p-value take into account...
We know that sample statistics vary. How does a hypothesis test and p-value take into account the reality of sampling variability?
How do you think of this paragraph? We know that bonds are basically when companies or...
How do you think of this paragraph? We know that bonds are basically when companies or governments agencies need money to complete their projects, they will issue bonds to investors. The investor may recover the funds and receive the interest at the interest rate set at that time on the bond repayment date. In this world, in order to consider the needs of investors, companies or governments may develop different types of bonds in the market. So, it causes that...
Cash and Account Receivable
1.1 When the bank reconciliation process was carried out on March 31, 20x1, there was a difference between the bank balance according to the books and the bank balance according to the checking account of Rp5,000,000. After checking again by accounting, it is known that the difference is because on March 30, 2021 payment has been received from the customer in the form of a transfer form and has been deposited with the bank, but the funds will only be...
How does the computational time changes when we decrease the k in k-fold cross validation? Why?...
How does the computational time changes when we decrease the k in k-fold cross validation? Why? Explain. b. In which procedures, we can apply k-fold cross validation. Consider all the procedures that we learned.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT