Cash Flow Forecast - Unit 15
confoosed
Registered Posts: 38 Regular contributor ⭐
This is probably a really simple question, but how are bad debts and depreciation treated in a Cash Flow Forecast. I didn't think depreciation was included but apparently it is, same for bad debts.
Hopefully someone can help. Thanks in advance. :confused1:
Hopefully someone can help. Thanks in advance. :confused1:
0
Comments
-
I don’t believe that they are included in cash flow forecasts as they are worked out at ETB stage. Technically they are not cash expenses either but are put through the books at year end under the accruals concept.
I stand to be corrected if I am wrong. :001_smile:0 -
An element of bad debts can be put through. If you make a provision for bad debts based on a percentage you would put this percentage on your cash flow forecast. For example:
Sales of 100,000 in January
70% pay 30 days after month end of invoice (70,000)
28% the month after (28,000)
2% never pay and are therefore bad debts (2,000)
Therefore you would never receive the 2% cash (2,000) and should make an allowance for this.
Depreciation is a non cash expense and therefore should not be included.0 -
Well explained gianni!0
-
Thanks Gianni0
-
I stand corrected. :crying:0
-
Don Juan
You were right, and so was Gianni.
No cash changes hands, so bad debts are not shown in a cash budget.Sandy
sandy@sandyhood.com
www.sandyhood.com0 -
Thanks :laugh:0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 318 NEW! Qualifications 2022
- 161 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 87 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership