The UCA Cash Flow Statement and the Traditional "Cash Flow" Proxy
Q: Is there a reason that the current shareholder’s note receivable was not included in the related party cash flow section on the UCA statement?
A: The $25,000 pay down in the Due from Shareholders account was combined with Distributions of $438,376 and reported as part of the $413,376 of Distributions and Loans to Owners, net payout in arriving at Net Cash After Operations. These events were consolidated since both represent transactions to make cash available to the owner of this “pass-through” entity for paying taxes or as compensation. Either way, both are considered operating events.
Because of the nature of the loan to shareholder, it is not considered to be a related party activity. Note also that the $25,000 transaction came about as a conversion from a loan to a distribution rather than as an actual cash repayment. An additional consideration is that a loan from a shareholder would be classified as a Related Party event.
Course overview: The UCA Cash Flow Statement and the Traditional "Cash Flow" Proxy