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  #1  
Old 02-14-2018, 11:19 AM
RHM RHM is offline
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Join Date: Apr 2015
Location: Central Illinois
Posts: 28
Unexpected Impact to cash flow.

I made a JE between two accounts
1. Debiting an expense account
2. Crediting an ‘Other Liability Acct’
I don’t understand why this transaction is on the Cash-flow statement.
It seems to me that it is ‘cash neutral’.

Can someone explain to me please?

tbanks,
Bob
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  #2  
Old 02-14-2018, 03:00 PM
Lorin Browning Lorin Browning is offline
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Location: Landrum SC
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Have you considered that the Net Income account is based on the difference between income and expenses. Using an expense account is an integral component of the Net Income. Cash was used to satisfy the Other Liability account but not to generate an expense.

Try this:
  • Click on Edit on the top or side Menu bar
  • Select Preferences
  • Select Reports & Graphs
  • On the top taps in the right section, select Company Preferences
  • Under Statement of Cash Flows, click on Classify Cash
Make sure there an account with a check mark is not being used to record cash transactions, such as income (revenues) you received or expenses you paid through a bank account. You may want to try the option to revert to the default accounts to see if you have the same results.

Perhaps discovering which account or accounts that are being in used the Statement of Cash flows that you are concerned about may help find a solution to your query. Just be sure that none of the accounts are Profit and Loss (Income Statement) accounts.
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Lorin Browning, Ph. D.
Fellow -- National Tax Practice Institute
lorin@lorinbrowning.com

Last edited by Lorin Browning; 02-14-2018 at 03:10 PM.
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  #3  
Old 02-14-2018, 03:12 PM
Lorin Browning Lorin Browning is offline
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Bob,

One more try: The expense account may be cash neutral but it is not neutral to the Net Income starting point for the statement of cash flows.
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Lorin Browning, Ph. D.
Fellow -- National Tax Practice Institute
lorin@lorinbrowning.com
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  #4  
Old 02-15-2018, 09:00 AM
RHM RHM is offline
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Join Date: Apr 2015
Location: Central Illinois
Posts: 28
Thanks Lorin,

I was unfamiliar with that "Classify Cash" button.

I really appreciate your contributions on the forum, I've learned a lot.
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