November 2, 2008
what factors make income statements number different from cashflow's?
Can you answer hado_hl3130's question about cash flow?:
I mean the net income/loss number vs net increase/decrease in cash.
Which is more reliable in assessing profitability of a business like a kindergarten?
I mean the net income/loss number vs net increase/decrease in cash.
Which is more reliable in assessing profitability of a business like a kindergarten?
Thanks.
Cash Flow Forecasting
Filed under More Cashflow Answers by admin
Comments on what factors make income statements number different from cashflow's? »
Assuming the kindergarten uses the accrual basis for accounting, the income statement should be a more reliable indicator of results. It's a cash business and school fees are received at the beginning of the month, so bad debts are rare. The biggest expense should be teachers' salaries, which are paid in cash. But some things like the depreciation of classroom furniture and teaching equipment will not be captured in a cash flow statement, but only in the income statement.