Hardware Suppliers reports a net income of $165,000. Included in net income is gain on the sale of land $20,000. A com
Posted: Sun May 29, 2022 8:31 pm
Hardware Suppliers reports a net income of $165,000.
Included in net income is gain on the sale of land $20,000. A
comparison of this year's and last year's balance sheets reveals an
increase in accounts receivable of $35,000, and increase in
inventory of $20,000, and a decrease in accounts payable of
$55,000.
What information does the operating cash flows convey about the
business operation? (Let's assume the net income
reported in the income statement of last year is the same of this
year). The operating cash flows essentially
is to reverse net income (GAAP accrual basis income) to
arrive at the actual cash received (cash-basis income).
So, what does that mean?
Included in net income is gain on the sale of land $20,000. A
comparison of this year's and last year's balance sheets reveals an
increase in accounts receivable of $35,000, and increase in
inventory of $20,000, and a decrease in accounts payable of
$55,000.
What information does the operating cash flows convey about the
business operation? (Let's assume the net income
reported in the income statement of last year is the same of this
year). The operating cash flows essentially
is to reverse net income (GAAP accrual basis income) to
arrive at the actual cash received (cash-basis income).
So, what does that mean?