Reporting activity in the statement of cash flows is predicated on the cash method of accounting rather than the accrual method used for other financial statements. Accordingly, all debits and credits to a bank account that has the general characteristics of a deposit account, whether restricted or unrestricted, as well as those instruments determined to be cash equivalents, generally should be reported as cash outflows and cash inflows. FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, explains:

CON 8 further indicates that cash flows should be recognized when they occur. Accordingly, reporting entities should generally only report cash flows that actually affected cash and cash equivalents (see FSP 6.9.2.1 for a discussion of constructive receipts and disbursements). Cash and cash equivalents may be found in multiple financial statement line items, such as cash and cash equivalents as well as amounts generally described as restricted cash or restricted cash equivalents. A statement of cash flows should not reflect cash flows that could have happened or are expected to happen.

Question FSP 6-1 addresses the reporting of an acquisition of a long-lived asset prior to the remittance of payment.

Prior to remittance of payment, the acquisition of a long-lived asset is a noncash investing activity. The reporting entity's statement of cash flows should not include an investing outflow for the acquisition of the long-lived asset. Payable amounts for the purchase of long-lived assets are not included in the reconciliation of net income to cash flows from operating activities. When the payable is paid, that amount is classified as an investing cash outflow. The fact that the reporting entity has sufficient cash to settle the accounts payable on the balance sheet date, or expects to pay the accounts payable shortly after the balance sheet date is irrelevant.