How does my cash flow differ from my profit

Assignment Help Accounting Basics
Reference no: EM13521825

The Statement of Cash Flows has historically given students a lot of heartburn, but it really isn't that scary. A cash-flow statement, simply stated, reports the uses (where the cash was spent) and the sources (where the cash came from) of cash during a period. Let's start with a very simplistic set of facts. I run a CPA firm, and I billed my clients $50K during the month of February. To earn that $50K, I incurred $20K of wage expense and another $10K of overhead (rent, utilities, insurance, etc.). So I made $20K profit, right? So I am sitting pretty? Not necessarily. What if I now tell you that $40K of my billings have yet to be collected? And my E&O insurance carrier increased my premium and I had to pre-pay $10K of premiums this month.

a) How does my cash flow differ from my profit?

b) Will these transactions appear on my income statement?

c) My cash-flow statement?

Reference no: EM13521825

Questions Cloud

Explian a binary separator sorts glass according to color : A binary separator sorts glass according to color, with clear glass being the intended material recovered and colored glass being the intended material rejected. Glass enters the separator at a rate of 1575 pounds per hour with clear glass being 1..
The chompy company uses a job order costing system : The Chompy company uses a job order costing system
Define molar enthalpy of vaporization of carbon disulfide : The molar enthalpy of vaporization of carbon disulfide is 26.74 kJ/mol, and its normal boiling point is 46°C. What is the vapor pressure of CS2 at 0°C
What is the limit of the accuracy : The y-component of a dust particle's velocity is measured with an uncertainty of 1.0×10?6 m/s, What is the limit of the accuracy to which we can locate the particle along the y-axis
How does my cash flow differ from my profit : How does my cash flow differ from my profit?
Evaluate the amount of heat needed to melt : Calculate the amount of heat needed to melt 2.00 kg of iron at its melting point (1,809 K), given that ΔHfus = 13.80 kJ/mol.
Application to feature a gui : A program written in Dr. Racket Scheme that makes use of lists, higher order procedures (e.g. map, filter, reduce) and/or recursion. If all of those could be used it would be best
Explain methane gas is completely combusted the products : Methane gas is completely combusted the products are carbon dioxide gas and water gas. What statement can be correctly made regarding the entropy change of this reaction
The book basis and tax basis of its assets and liabilities : Education Sciences Company, in its first year of operations, has the following differences between the book basis and tax basis of its assets and liabilities at the end of 2007.

Reviews

Write a Review

Accounting Basics Questions & Answers

  What proceeds does mayberry receive from the investors

Mayberry Gas Corp. sells $200,000 of bonds to private investors. The bonds are due in five years, have an 8% coupon rate, and interest is paid semi-annually. The bonds were sold to yield 6%. What proceeds does Mayberry receive from the investors?

  How much pie and ice cream will toby eat

Toby tucker is on a very strict diet and it's allowed a bonus on saturday night if he remains in his diet throughout the week. The bonus must contain no more than 200 mg of sodium and no more of 60 g carbohydrate.

  Journalize the adjusting entry required at september

Journalize the adjusting entry required at September 30, the end of the first month of the current fiscal year, to record the accrued product warranty.

  Determine the lump sum deposited today that will yield the

find the lump sum deposited today that will yield the same total amount as payments of 18000 at the end of each year

  Shift from gaap to ifrs

Over the next few years companies will be shifting away form GAAP to IFRS (International Financial Reporting Standards). GAAP was a rules based approach to accounting where IFRS is a more principals based approach to accounting.

  Calculate how much in sum the mariners are saving

First assume that all of the deferred money and accumulated interest is paid out along with the final salary payment at the end of 2012. Use 5.5% as the discount rate. What is the present value (as of the signing date) of Ichiro's contract under t..

  Write down a 350-word response about the differences

write a 350-word response regarding the differences between the direct and indirect presentation of cash flows. why

  Business problem and opportunity confronting

Prepare a paper which examining a business problem and opportunity confronting your organization that you feel could be addressed through the application of business research principles by performing the following:

  Discuss it and have this alternative and the reasons for

dreamjay aviation has called on your business consulting group again for advice. bradley has decided that they should

  What is the amount of the depreciation in year 2 for 3-year

The MACRS depreciation allowances on 3-year property are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. What is the amount of the depreciation in year 2 for 3-year property with an initial cost of $64,000 ?

  Provide recommendations to the cpa about how to select

A CPA is interested in testing the fairness of the ending inventory balance at an audit client. He has relatively little experience using statistical sampling methods and, does not like to turn anything over to random chance.

  Lease amortization schedule and appropriate entries

Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the inception of the lease through January 1, 2012. Amortization is recorded at the end of each fiscal year (December 31) on a straight-line basis

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd