Why is it necessary to convert accrual-based net income to a cash basis when preparing a statement

Question:

Why is it necessary to convert accrual-based net income to a cash basis when preparing a statement of cash flows?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Intermediate Accounting

ISBN: 978-0470423684

13th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield

See More Books

Question Posted: Dec 24, 2010 07:10 AM

See More Questions

Why is it necessary to convert accrual basis net income to cash basis income when preparing a statement of cash flows?
Why is it necessary to convert accrual-based net income to cash-basis income when preparing a statement of cash flows?
When preparing a statement of cash flows using the direct method, why must the sales revenue figure be adjusted to arrive at cash receipts from sales?
True or False? Azure files can be accessed from anywhere in the world using a URL that points to the file. True False
The chapter mentions that in 1965, married women with children did an average of 32 hours of housework per week, while men did an average of only 4 hours of housework-a total of 36 hours of...
Pil Corporation paid $170,000 for an 80 percent interest in Stu Corporation on December 31, 2011, when Stu's stockholders' equity consisted of $100,000 capital stock and $50,000 retained earnings. A...
Suppose that the full model is $y_{i}=\beta_{0}+\beta_{1} x_{i 1}+\beta_{2} x_{i 2}+\varepsilon_{i}, i=1,2, \ldots, n$, where $x_{i 1}$ and $x_{i 2}$ have been coded so that...
The manager of a commuter rail transportation system was recently asked by her governing board to determine which factors have a significant impact on the demand for rides in the large city served by...
Identify any five stakeholders who would be interested in Grassland s financial information and explain why and how each would use the information.
The sketch graph shows the 13 successive ionisation energies of aluminium. a. Define the term 1st ionisation energy. b. How does the graph provide evidence for the existence of three electron shells...
Unlike the other major financial statements, the statement of cash flows is not prepared from the adjusted trial balance. From what sources does the information to prepare this statement come, and...
Differentiate between the direct method and the indirect method by discussing each method.
Describe the types of assets that are typically included under the heading "cash and cash equivalents" on the balance sheet. What is a "cash equivalent"?
A sequence is given: F F M M F M M F M F F M M F (a) Identify the values of n, $n_{1}, n_{2}$, and $r$. (b) Determine the critical values at the $\alpha=0.05$ level of significance. (c) Conduct...
\(\sigma_{1}
Each chapter in the textbook contains a continuation of this problem. The objective is to learn how to do a comprehensive financial statement analysis in steps as the content of each chapter is...
If we have a large sample of data, then using critical values from the standard normal distribution for constructing a $\boldsymbol{p}$-value is justified. But how large is "large"? a. For a...
The data file collegetown contains data on 500 single-family houses sold in Baton Rouge, Louisiana, during 2009-2013. The data include sale price in $\$ 1000$ units, PRICE, and total interior area...
In what ways are First Amendment protections limited?
What is the difference between adsorption and absorption?
It is proposed to improve performance through a section of pipe by adding an identical section in parallel. If the total flowrate remains constant, what parameter changes and by how much, assuming...
Widnet Manufacturing Inc. operates the Home Appliance Division as a profit center. Operating data for this division for the year ended December 31, 2010, are shown below. In addition, Widnet...
Schwinn Manufacturing Company manufactures a variety of garden and lawn equipment. The company operates through three divisions. Each division is an investment center. Operating data for the...
G-Bar Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing in the boarding of broodmares and their foals. A recent economic downturn in the thoroughbred industry has...
The following financial information is given. Year 1 Year 2 Book value of assets $18,000 $26,000 Market value of equity 18,000 60,000 12 months ended Year 1 12 months ended Year 2 Sales $1,000 $1,300...
Purple Corporation is undergoing financial difficulty and planning to liquidate its assets. Current ratio is currently at 1.5x. Purple Corp. current liabilities is 500,000; non-current liabilities of...
Amor Co. is undergoing financial difficulty and the shareholders decided to liquidate the company. The company reported cash of P65,000 and building valued at P875,000. They owe P560,000 to various...

Why is it necessary to convert accrual-based net income to a cash basis when preparing a statement

Question:

Step by Step Answer:

It is necessary to convert accrualbased net income to a cash basis because net income ...View the full answer

Intermediate Accounting

Students also viewed these Accounting questions