Forecasting B/Sheet and Cashflow from someone else's P & L

Forecasting B/Sheet and Cashflow from someone...

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I am doing a forcast balance sheet , some else has done the P&L .

My question is this in practice where do people normally DUMP the difference on the balance sheet ? OR do they do not do this at all.

The other problem will be to get the cash flow to balance .

This is the first time I am doing this and would welcome some help .

Thank you team .

edward fraser

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By jonnyd
13th Nov 2001 10:00

Forecasts
Buy win-forecast. It will pay for itself many times over.You are wasting your time using spreadsheets.

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By Accounting WEB
05th Nov 2001 22:24

No quick way to answer this!
Edward, your question is not really answerable in the same terms in which you've asked it, in my opinion. In a well prepared and worked-out forecast, there should be no "difference" to dump anywhere, using double-entry. Every income and expense will have it's effect on the assets/liabilities or capital account of the B/Sheet, it's a question of knowing what assumptions to use, so you can post these "effects" to the right b/s accounts. To use a simple example, imagine a business with an opening b/s:
Cash £1000
Capital £1000
Assume the only two transactions in the next year will be Sales £2500, purchases £1250, and that all transactions are paid/received in cash immediately.
OK, someone else has already done the forecast P&L:
Sales £2500
Purch £1250
Net Profit £1250
You therefore know that the forecast B/S will look like this:
Cash: £2250
Represented by:
Op. Cap £1000
Net Profit £1250
(Total £2250)
There, no "difference" to dump anywhere!
Same principles apply when you assume debtors pay 6 months after invoiced, creditors are paid 5 mths after, drawings are £100 per month, etc etc.
The answer to your question rests upon strict adherence to double-entry.
I hope that's a start for you. The next stage is to open a spreadsheet and plan it all out.

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By Accounting WEB
05th Nov 2001 23:20

Balanced cash flow, P&L and B/S
Hi,

If using a spreadsheet, prepare the cash flow as the first step. Run the cash flow throuygh an extended trial balance - this gives a balanced P&L and B/S. The ETB is then rounded off and carried forward to a set of accounts. The cash flow is taken forward into a summarised cash flow statement, and the closing bank balance can be agreed to the ETB balance to confirm there are no differences. Accruals/prepayments are entered on the ETB, affecting profit but not cash flow. Cash timing differences (e.g. debtors) are run through the cash flow and are picked up by the entry in the debtors control in the ETB.
If you want to see a fully worked example see the Accountant's Guide to Excel, reviewed in AccountingWeb.

Regards

James Fulford

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By Philip Hoyle
06th Nov 2001 08:00

Sage Winforecast
You could buy Sage Winforecast for a few hundred pounds. This would produce the monthly cash flow, monthly P&L and monthly balance sheets for you, and also allow for what-if scenarios.

It does the balancing for you. Time saved as opposed to writing your own spreadsheet can be quite substantial, and it provides a list of all your assumptions for reference.

(No I don't work for Sage - I am happy to recommend it though).

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