Cross Transactions influence the Fund (Working Capital)

Balance Sheet is made up of Current Assets, Current Liabilities, Non-Current Assets and Non-Current Liabilities.
+ All accounting transactions affect the balance sheet.
All accounting transactions affect one or more of Current Assets, Current Liabilities, Non-Current Assets and Non-Current Liabilities.

All accounting transactions may influence funds

From
Working Capital = Current Assets - Current Liabilities;
(Or) = Non-Current Liabilities - Non-Current Assets

we can say that any transaction that brings about a change in one or more of Current Assets, Current Liabilities, Non-Current Assets or Non-Current Liabilities may result in a change in Fund or Working Capital.

+ All accounting transactions affect one or more of Current Assets, Current Liabilities, Non-Current Assets and Non-Current Liabilities.
All accounting transactions may influence the fund or working capital.

We use may because there are some accounting transactions which do not bring about a change in fund or working capital.

Accounting transactions not influencing funds

We see no change in working capital, where, on account of a transaction, there is a

change by the same amount in the same direction in

a current asset and a current liability
(Or) a non current asset and a non current liability

change by the same amount in opposite directions in

two current assets
(Or) two current liabilities
(Or) two non-current assets
(Or) two non-current liabilities

Cross Transactions : Accounting transactions influencing funds

We see a change in working capital, where, on account of a transaction, there is a

change by the same amount in the same direction in

a current asset and a non-current liability
(Or) a current liability and a non current asset

change by the same amount in opposite directions in

a current asset and a non-current asset
(Or) a current liability and a non-current liability

Cross Transactions

Cross transactions are accounting transactions involving one account which falls in the current area and another account which falls in the non-current area of the balance sheet and which change in the same direction when one of them is an asset and the other is a liability or in opposing directions when both are either assets or liabilities.

Cross transactions is an idea used in the topic funds flow analysis. Such transactions influence i.e. bring about a change in fund or working capital.

n~6 t~1 «Note~6_Topic~2 » n~6 t~3