Possible bug with Cash Flow Report

Mike or Penny Novack stepbystepfarm at mtdata.com
Sat Nov 7 07:50:07 EST 2009

I'm going to address this in more general terms

>>Ok, I think I get it.  Please allow me one follow up.  I believe
>>what you and others are says is that:
>>1) There is no bug,  the cash flow statement is reporting what it
>>should 2) The transactions were properly recorded
>>The question boils down to: Is it your opinion that everything is
>>fine with this transaction, or should I have recorded it
>I'm assuming that the credit card payment is shown in the Cash Flow 
>Statement as an outflow of cash. If so, then I don't think there is 
>any bug and that what you did is, I think, acceptable. 
>In a larger company, a personal expense charged to the company and the 
>decision to apply the resulting receivable against the loan from 
>shareholder may have been recorded separately. That means that the 
>company would have offset the credit card charge against a receivable 
>from you and then made a separate transaction clearing the receivable 
>and reducing the loan from shareholder. (The first is generally an 
>administrative matter, the second often involves legal issues.)
The PURPOSE of bookkeeping/accounting is information about the financial 
activity. If there is a short sequence of transactions A=>B=>C such that 
the net effect is just to A and C you saved time by shortcutting the 
transaction as A => C but in doing that lost information. And that was 
information which might have made clearer just what was taking place.

I wouldn't consider this just a big company vs small issue though as 
explained the big company would have had additional reasons for stricter 
adherence to procedures.

Don't be afraid to TEST. In a case like this where following taking a 
shortcut reports did not seem to provide the expected information one 
thing you could do is set up a "test environment" (copy of the data file 
in a different directory) and then open this set of (test) books, back 
off the shortcutted transaction and re-enter in full form, and now try 
the report. If that restores the "missing information" you can make the 
same change in your real books.


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