Question

Anyone can help me answer this question around 300 words each with typing and with link!!! need it asap!!! (finance statement analysis)

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Income Flows versus Cash Flows; Understanding the Statement of Cash Flows Do you prefer income flows or cash flows. Share your opinion. Then search the Internet for articles about income flows versus cash flows. Post the article that you find to be the most unreasonable. Explain why?

Answer 1

Answer:

• Income flow is essential to be considered by the organization to record the transactions and accounting activities performed within the organisation as it is required ACCOUNTING STANDARD ON "Disclosure of Accounting policies" . Income flowflo calculated by subtracting cost of sales, operational expenses, depreciation, amortization, interest, and taxes from total revenue. Also called accounting profit, net income is included on the income statement along with all revenues and expenses.
• And in the meantime cash flow is also to be taken into consideration as it is required by the organisation to account the flow of cash during the financial year and it has to be a part of financial statements at the year end that are to be audited and presented in the AGM to the members of Company.  

  The cash flow statement (CFS) measures how well a company manages its cash position, meaning how well the company generates cash to pay it's debt obligations and fund it's operating expenses.

  Cash flow from operations is part of the statement of cash flows. The cash flow statement is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

  Cash flow from operations includes day-to-day, core activities within a business that generate cash inflows and outflows. They include the following:

• Receipts from sales of goods and services, collected during a period
• Payments made to suppliers of goods and services used in production
• Payments to employees or other expenses made during a period
• Rent payments
• Income tax payments

Internet Article on cash flow and income flow :

• Income flow is the revenues recognized in a reporting period, less the expenses recognized in the same period. This amount is generally calculated using the accrual basis of accounting, under which expenses are recognized at the same time as the revenues to which they relate. This basis of accounting calls for the use of expense accruals to accelerate the recognition of expenses that have not yet been paid, as well as the use of prepaid expenses to defer the recognition of costs that have not yet been consumed. In addition, sales are recognized as they are earned, rather than when the associated amounts of cash payments from customers are received. The result is a net income figure that does not reflect the amount of cash actually consumed or generated in a period.
• cash flow is the net change in the amount of cash that a business generates or loses during a reporting period, and is usually measured as of the end of the last day in a reporting period. Net cash flow is calculated by determining changes in ending cash balances from period to period, and is not impacted by the accrual basis of accounting.

• Given these descriptions of net income and net cash flow, the key differences between net income and net cash flow are:

• Expense accruals. Expenses are included in the calculation of net income for which no cash payments may have yet been made.
• Prepaid expenses. Cash payments for costs incurred may be recorded as assets instead of expenses, since they have not yet been consumed.
• Deferred revenues. Revenues are excluded from the calculation of net income, because they have not yet been earned, even though the related cash may have already been received (perhaps as a customer deposit).
• Sales on credit. Revenues are included in the calculation of net income, because they have been earned, even though the related cash receipts may not yet have been received.
• income is the profit a company has earned for a period while cash flow from operating activities measures, in part, the cash going in and out during a company's day-to-day operations.
• Net income is the starting point in calculating cash flow from operating activities. However, both are important in determining the financial health of a company.