Question

1. Describe the difference between profit and cash.
2. What are the differences between cash from operating activities, cash from investing activities, and cash from financing activities?

Answer 1

Cash Refers to Amount of Money Received by Operation of the company such as sale of the Goods / Service or amount received from the investors whereas Profit Refers to Amount of Money left after all the expense is paid.

Profit = Income – Expense
Cash = Sales Revenue + Amount Invested by Investor

Particular	cash from operating activities,	cash from Investing activities,	cash from Financing activities,
Meaning	Cash flow from Operating activities relating to Net Income. It is related to Companies Day to Day Acivities.	Cash from Investment Activities Relating to non-Current Investment	Cash from Financing Activities Relating to Non Current Liabilities an owner’s Equity.
Example	1.Cash Received from Sale of Goods 2. Cash Received from Royalty, Fees and Commission. 3. Cash Paid to employees and supplier. 4. Cash Payment or refund of Income Tax.	1. Cash Paid to acquire the Fixed or Intangible assets. 2.Cash Paid for Acquire share, warrants of other enterprise. 3.Dividend Received on Investment. 4. Interest Received on Investment in debenture in Bonds. 5.Cash Advance and loans made to third party.	1. Cash Proceed from Issue of shares , Debenture, Warrants, Bondsor other instruments. 2.Cash Repayment of Amount Borrowed. 3. Dividend Paid to Share holders. 4.Interest Paid to Debenture holder and Bond Holders.
Formula	Operating Cash Flow = Cash inflow from operating activities – Cash outflow from operating activities	Investing Cash Flow = Cash inflow from investing activities – Cash outflow from investing activities	Financing Cash Flow = Cash inflow from financing activities – Cash outflow from financing activities