Keith said:Not 'wrong'. Merely inappropriate in the current climate of squeezed
margins, credit assessment/evaluation and institutional interference.
Unless you're a cash business without payables, receivables, bank loans,
heat, power, telephone, insurances, rates and staff of course.
I have been pondering this all week. Ledger Bookkeeping obviously hasIn today's barcode driven, data
efficient society - where cashflow is king - such methods must be
consigned with the quill pens and sand shaker to the museum.
I repeat - any fule can analyse historical data. It's using it to
improve efficiencies and pre-guess the future that's important imo.
its advantages, but so does Cash Accounting - the principal being that
there is (scale charge etc aside) no need to reconcile the VAT
Suppose for simplicity:
1) When an invoice is raised it is posted *net* into the system:
CR Sales DR Debtors.
2) When it is Settled it is *copied* into to a Cash Book, grossed up
for VAT, and the original entry deleted.
What efficiencies are being compromised? Are you saying that because
Receivables and Payables are Net instead of Gross, that the accounts
no longer forecast the future Cash Flows?