How is net income in the income statement different from the cash flow from operating activities in the cash flow state
Posted: Sat Aug 07, 2021 7:22 am
How is net income in the income statement different from the cash flow from operating
activities in the cash flow statement?
Answer: Net income is comprised of revenues expected to be received for goods and services
delivered to a customer less expenses used to earn revenue during the period; it is not based on
cash flows or cash basis accounting. This means that revenues and expenses are recognized even
if they were paid in cash in a prior period or have not yet been paid by the end of the reporting
period. Cash flow from operating activities is cash flow based on actual cash receipts and cash
payments during the accounting period.
activities in the cash flow statement?
Answer: Net income is comprised of revenues expected to be received for goods and services
delivered to a customer less expenses used to earn revenue during the period; it is not based on
cash flows or cash basis accounting. This means that revenues and expenses are recognized even
if they were paid in cash in a prior period or have not yet been paid by the end of the reporting
period. Cash flow from operating activities is cash flow based on actual cash receipts and cash
payments during the accounting period.