How can I keep track of receipts better?

I'm having a lot of trouble converting cash receipts/disbursements to accrued rev/exp?

• What counts as a positive and negative cash flow isn't really all that intuitive to me when converting cash to accrual, and vice-versa. What is an easy way to keep track of all the things I substract/add to cash to get accrued rev/exp, and all the things I add/subtract to accrued rev/exp to get cash? I get really confused when doing a variety of problems like this. If there's an easy way to always know what events constitute a positive cash flow and what events constitute a negative cash flow, conversion would be much easier. I've tried looking this up online, but everything I find is ambiguous to me. It will say add or subtract certain items of liabilities or assets to Net Income. But for my purposes, I'm usually just looking at accrued revenue and accrued exp separately, or looking at cash receipts and cash disbursements separately. So how can I keep track of what to add to what, and when? Also, does a decrease in inventory have an affect on cash? I know an increase in invt constitutes purchases, which increase accrued liabilities (assuming you purchase invt on account), which reduces net income. But since no cash is traded, you add this back to get a cash basis figure. Right? So what about a decrease in inventory? I can't visualize that one as easily.

• Answer:

  The best way is to prepare T accounts. Insert the figures for opening and closing balances, the insert figures representing transfers to Income Statement to get the cash receipt or payment. Alternatively, insert cash receipts or payments to get Income statement figure. Similarly for the assets and liablities accounts. If you need any further help, an exercise or problem will help you understand better.