Hello, I think the cash flow statements generated by Manager need improvements.
Operating activities include changes in retained earnings. Normally cash transactions involving equity accounts are financing activities.
Investing activities include all acquisitions, both cash and non cash. Normally, non cash transactions are excluded.
Instead of focusing on simplicity, I believe it would be more useful if users are allowed to classify each cash transaction by providing options when they create payments and receipts
@WSD it would be better if screenshot would be shown for the context.
There are two layouts for cash flow statement - direct and indirect method.
Indirect method shows how net profit reconciles to operating activities. In order to explain reconciliation, non-cash and non-operating activities are included too.
@lubos i think he want to select cash flow category on every line of each receipt or payment. Then those transactions would appear under that Category on CF statement.
If custom fields and other fields filtering and grouping is extended to all reports (P&L BS, CFS Inventory reports etc), then that would allow us to obtain any kind of report such as customer, division/project, custom field specific reports.
Yes, that’s exactly what I mean. I purchased a laptop from my regular supplier. The laptop was a piece of equipment, because I would use it in the office. So, the acquisition should be classified as an investing activity.
With the current features however, Manager treats it as operating, because the account payable is affected by the transaction
I believe by providing classification options in the payments and receipts, the problem would be solved.
If you are expensing this equipment rather than capitalising it, then I suggest you create an expense account called “Expensed equipment” and nominate it as an Investing Activity.
You are correct @shahabb .
The Indirect method reports correctly, but the Direct method reports incorrectly.
This is how it appears if you use the Expensed Equipment account as I suggested:
Indirect Method:
But equipment should be depreciated, not expensed when it is acquired.
Also retained earnings, it’s a built-in equity account n manager, why the change in the balance is treated as operating? No field to change the “default” classification.
With regard to the direct method results in different outcome to indirect method, it confirms my first suggestion, something has to be done to improve the reports
There doesn’t appear to be a consensus whether cash flow statement should be looking at underlying accounts behind invoices or not.
When new receipt is recorded against invoice that is charging for Sales.
Which account should be credited on cash flow statement? Accounts receivable or Sales ?
In the current version it’s Sales but some users argue it must be Accounts receivable.
Accounting standards do not get this technical. Either way is acceptable.
I think more correct way is Sales but I’m wondering whether it’s not overcomplicating the report. It could be Accounts receivable and if you want to override it for whatever reason, perhaps on cash transactions you could choose cash flow statement group if required. That is what @WSD originally suggested.
Yes, accountants as we are know exactly what cash receipts/payments belong to. I prefer the direct method, and just add a field in the respective forms, add settings to map the line-items, it would do I believe
I came to conclusion that cash flow statement should not be looking at underlying accounts behind receipts / payments linked to invoices.
Mostly because it adds another layer of complexity and makes it more difficult to see where the figures are coming from for very little marginal benefit.
I will go ahead with @WSD original idea and that is to allow users to pick cash flow statement group on individual receipts and payments to override default classification. This means when you are drilling-down to transactions from cash flow statement, it will be easy to recategorize individual receipts or payments if they belong elsewhere on cash flow statement.
