At this stage, our profit and loss accounts for the projected years are now completely populated. However, our balance check is still showing a red FALSE, indicating that there is something missing from the balance sheet. Unlike other items, it is not possible to project cash. The cash balance is a fallout from all transactions carried out during the period under review. This fact is captured in the cash flow statement, which considers the inflows and outflows of cash. The net result is then applied to the opening cash balance to arrive at the closing cash balance at the period end. The following screenshot shows a completed cash flow statement, which ends with a closing balance for cash, which is taken to the balance sheet:
When the closing cash balance is taken to the balance sheet, the balance check for the projected years should now show a white TRUE on...