Australia Cash Flow Statement vs Income Statement


Arv

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Hi
Say i have cash receipts in January for 100,000 (Revenue will include deferred revenue amount as well).
Revenue on the Income Statement may show a higher / lower amount (due to new invoices raised, settlement by customers and cash receipts for those customers invoiced as well as revenue accruals in current month).

What would be the right approach / equation to work backwards so that i can tie to the Income Statement?

Thanks,
arv
 
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It appears your question is effectively how to prepare a statement of cash flows. You state that you want to be able to tie to the income statement. This implies that you have already deduced net income. In which case you would start with that amount and make additions and subtractions where applicable. With the inputs you provided, the following would be performed:

net income
+/- decreases / increases in A/R
+/- increases / decreases in unearned revenue

Also, since you're looking to tie cash to the income statement, the indirect method of preparing the statement of cash flows would serve that purpose. There is also the direct method, which is not widely practiced, but which is recommended by the IASB.
 
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