Classifying the accounts allows you to generate a statement of cash flows. This report shows how your cash position has changed over time, profit earned and where your cash was spent. Classification | Example |
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Financing | Balance sheet items that are to do with borrowing money or the repayment on borrowings. For example, hire purchase, leases, and bank loans. In some cases, this may also include directors' or shareholders' loans. | Investing | Balance sheet items that are used when deciding on how to utilise cash for the acquisition of fixed assets, plant and equipment, and investments. The sale of these assets or the redemption of investments into cash is also an investing activity. | Operating | All other balance sheet items where it is effectively a timing issue that creates the transaction, for example, accruals and prepayments. Accumulated depreciation is classified as operating so that it offsets the depreciation expense in the profit and loss report. |
If you’re unsure about which classification to use, consult your accountant or an MYOB Certified Consultant/Approved Partner. |