How does a change in accrued liabilities impact cash flow?
When accrued liabilities increase, that means that the company recognized the expense in the income statement but has not actually paid cash for those expenses yet. Therefore, an increase in accrued liabilities (and really any liability) results in a cash inflow, while a decrease in accrued liabilities results in a cash outflow.
Back To All Questions
You might also be interested in...
-
How do changes in prepaid expenses impact cash flow?
When the prepaid expense balance increases, that means the company has a cash outflow for expenses that have not yet been recognized in the income statement. An example that you might see on the CPA exam might indicate that if the company prepays rent for 12 months, the prepaid rent balance will increase for the...
-
What are the three sections of the cash flow statement?
The three sections are operating, inventing, and financing. The phrase “Oops I forget” is helpful to remember the three section. The “O” in oops represents operating, the “I” represents investing, and the “f” in forget represents financing. The operating section of the statement of cash flows will represent the cash inflows and outflows from operating...
-
What is reported in the financing section of the cash flow statement?
The financing section includes activities related to debt or equity activities. This would include issuing common stock, issuing preferred stock, treasury stock, dividend payments, issuing bonds, issuing notes, and payment of principal of debt.
How do changes in prepaid expenses impact cash flow?
When the prepaid expense balance increases, that means the company has a cash outflow for expenses that have not yet been recognized in the income statement. An example that you might see on the CPA exam might indicate that if the company prepays rent for 12 months, the prepaid rent balance will increase for the...
What are the three sections of the cash flow statement?
The three sections are operating, inventing, and financing. The phrase “Oops I forget” is helpful to remember the three section. The “O” in oops represents operating, the “I” represents investing, and the “f” in forget represents financing. The operating section of the statement of cash flows will represent the cash inflows and outflows from operating...
What is reported in the financing section of the cash flow statement?
The financing section includes activities related to debt or equity activities. This would include issuing common stock, issuing preferred stock, treasury stock, dividend payments, issuing bonds, issuing notes, and payment of principal of debt.
