[bean counter]

The biggest part of FAR that I have been struggling with has been accrual to cash and cash to accrual. I’ve heard it is a well tested topic. Does anyone have some tips on the conversion? On that same note – is that type of conversion done quite often in the real world? I have been at the same company for over 10 years so I haven’t had any hands on experience with it.

Any advice would be very much appreciated!

BEC - 84 *
AUD - 73, 76 *
REG - 70, 72
FAR - 09/08/16

[Fluffy]

BUMP******

I Cant UNNDERSTAND this either…. It Just doesnt make sense lol
Anyone have any Mnemonic or trick? POR FAVOR?

[Anonymous]

Best I can tell you is just try to think through it. I know that's not useful. 😐 But try to slow down and think through it painstakingly piece-by-piece. Think of the mom-and-pop's cash-basis bookkeeping, and how it would differ from the accrual-basis bookkeeping.

So, you have $10,000 increase in AP during the year. How does that relate to cash expenses? Pretend they spent $5,000 in cash. What's total expense in cash? $5,000. What's total expense in accrual? $-5,000 or $15,000? If you think it through like that, it will help you to understand.

Creating cash flow statements from accrual books is something that's done a lot in real life, and that's sorta accrual to cash. Translating the whole financial statement isn't common, but you basically have to translate all the information in order to create an indirect cash statement, so the basic method is common, even if the specific application isn't.

[GitRDone2017]

I see the conversion from cash to accrual and vice versus quite a bit at the firm I am employed by. It is something that took a really long time to completely understand and I am positive that I could not explain it in a way that made sense, sorry

AUD - 82
BEC - NINJA in Training
FAR - NINJA in Training
REG - NINJA in Training

"confidence is going after Moby Dick in a rowboat and taking the tartar sauce with you" ~ Zig Ziglar

"Confidence is going after Moby Dick in a rowboat and taking tartar sauce with you" - Zig Ziglar
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AUD Oct 2016
FAR Nov 2016
BEC ?
REG?

[Author]

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