Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 5 - Balance Sheet and Statement of Cash Flows - Review and Practice - Questions - Page 238: 22


Generally, the difference between these two amounts could be due to an increase in the current assets (i.e an increase in the accounts receivable fro a sale on account which could ultimately result to an increase in revenue as well the net income but has no effect yet on cash). In the same manner, a cash payment that results to a decrease in an exiting current liability (i.e. accounts payable would definitely decrease cash provided by operations without affecting the net income.

Work Step by Step

Ideally, the cash flow statement records the actual amount of money that a company receives from its normal operations and the reason behind between the cash and the profit in this statements is because the income statement is prepared under the accrual basis of accounting.
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