EM2967 - Examining Accounts: Cash-Flow Tests
‘Surplus Cash’
Cash flow tests can also show surpluses at various dates in the accounting period. Surpluses may equally throw doubt on the records, or explanations about banking or cash handling practices.
For instance, if a taxpayer tells us that they bank all their takings on a Monday except for a £200 float, the following situation would require an explanation.
Week 10
| £ | ||
| Balance brought forward from week 9 (ends Sunday) | 1200 | |
| Cash takings | 2500 | |
| 3700 | ||
| £ | ||
| Monday - cash to bank | 1200 | |
| Cash expenses | 100 | |
| Cash drawings | 100 | (1400) |
| 2300 | ||
| Week 11 | ||
| Monday - cash to bank | (1300) | |
| Cash surplus | 1000 |
The float of £200 at the beginning and end is excluded.
You will need to consider what may have happened to the £1,000?
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)