Why is it necessary to convert accrual-based net income to cash-basis income
- Why is it necessary to convert accrual-based net income to cash-basis income when preparing a statement of cash flows?
- The 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.
……………..Answer Preview……………
The statement of cash flows tracks the flow of cash in and out of the business. The cash-basis income is exactly the flow of cash in and out of the business. Accrual- based income, on the other hand, includes several adjustments that just…
APA
334 words