At a meeting, one of your colleagues states, I cannot understand why we dont use the cash
Question:
At a meeting, one of your colleagues states, “I cannot understand why we don’t use the cash flow inflows from sales revenue less the cash outflows related to our expenses to determine our net income. Wouldn’t this be the best way of calculating net income? What is problematic with this approach?”
Required
Respond to your colleague’s statement and address her questions.
Step by Step Answer:
Many businesses are required to sell on account in order to remain compe...View the full answer
Understanding Financial Accounting
ISBN: 9781119715474
3rd Canadian Edition
Authors: Christopher D. Burnley
Related Video
In order to determine the amount of cash created by operating operations, the indirect technique for preparing the statement of cash flows entails adjusting net income with changes in balance sheet.
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