Question: Why is it necessary to convert accrual based net
Why is it necessary to convert accrual-based net income to cash-basis income when preparing a statement of cash flows?
Answer to relevant QuestionsThe president of Ferneti Company is puzzled. During the last year, the company experienced a net loss of $800,000, yet its cash increased $300,000 during the same period of time. Explain to the president how this could occur.Garcia Inc. reported sales of $2 million for 2010.Accounts receivable decreased $200,000 and accounts payable increased $300,000. Compute cash receipts from customers, assuming that the receivable and payable transactions ...The comparative balance sheets for Goltra Company show these changes in noncash current asset accounts: accounts receivable decrease $80,000, prepaid expenses increase $28,000, and inventories increase $30,000. Compute net ...Young Corporation reported income taxes of $340,000,000 on its 2010 income statement and income taxes payable of $277,000,000 at December 31, 2009, and $522,000,000 at December 31, 2010. What amount of cash payments were ...The current sections of Bellinham Inc.’s balance sheets at December 31, 2009 and 2010, are presented here. Bellinham’s net income for 2010 was $153,000. Depreciation expense was $24,000.InstructionsPrepare the net cash ...
Post your question