Fundamental Accounting Principles -Hardcover
Fundamental Accounting Principles -Hardcover
22nd Edition
ISBN: 9780077862275
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
Question
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Chapter 16, Problem 7BTN
To determine

Introduction:

Cash flow: It is the cash inflow and/or cash outflow in a business. Any transaction or event that involves dealing in a cash in a business, comes under cash flow. If a cash goes out of the business, it is termed as a cash outflow and if a cash comes in the business, it is termed as a cash inflow. So, cash flow (=cash inflow- cash outflow) is the available cash for a business to use.

Net income: Net income is the total revenues less all expenses and costs, incurred. In other words, net income or profit of a business is calculated by deducting all expenses and costs from total revenues.

Sources of financing: It is the source of amounts to be invested in a business. For example, loan can be provided to invest in business. In this case, the source of financing is debt.

To explain:

  1. How cash flow can lag behind the net income.
  2. Potential sources of financing for its future expansion

Blurred answer

Chapter 16 Solutions

Fundamental Accounting Principles -Hardcover

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