Q: Is it correct that the UCA exercise basically changes the income statement from accrual to cash accounting?
A: Yes. The UCA cash flow statement identifies the cash amount for all revenue and expenses reported on the accrual income statement. Business Cash Income is the cash counterpart to accrual net income.
But the UCA goes further. It determines if there is sufficient cash flow to pay down long-term debt as scheduled. It identifies the amount of cash spent on fixed assets and other long- term investments. It identifies a financing requirement for the year. It identifies the sources of cash to meet the financing requirement.
If the statement is properly constructed, the calculated change in cash - the financing requirement less the financing - will equal the change in cash from the company's accrual balance sheet.
Q: On slide 51, where do you get the financing amount of $417,779?
A: It's the sum of $285,935 of additional short-term debt and $131,844 of new long-term debt. See Slide 50 for the computation of new long- term debt.
Course overview: Uniform Credit Analysis (UCA) Cash Flow Statement