Hello,
I am trying to produce a reliable and accurate cashflow statement in Sage 50 Quantum Accounting Canada.
To me, a cashflow statement should start with net income, then take into account cashflow adjustments from operating activities, investing activities and financing activities.
A large part of the cash adjustments from operating activities is the fluctuation in accounts receivables and accounts payables. I am lucky to work in a business with little to no receivables, so my question pertains to payables, particularly payables that don't affect the income statement.
For example, if I buy furniture on credit, this will not hit my income statement, it will only hit my balance sheet.
Dr. F&F
Cr. A/P
However, when I look at my A/P fluctuation in my cashflow statement, I see this transaction included in the fluctuation. To me, I would think this should not affect my cashflow statement because I am starting with my net income and the transaction above does not affect the income statement, so it should not be included in my C/F statement. (I am ignoring depreciation/amortization in this example).
I also realize this should be in investing activities and not operating activities (it's currently appearing in operating activities).
Perhaps I am missing something, or maybe I haven't set up the accounts correctly in my chart of accounts. Can someone help me out?
