Need help with some accounting questions?
Need help with some accounting questions?
Question 1
Is it possible to have a positive net income and negative cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.
Question 2
Is it possible to have a negative net income and positive cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.
Answers:
Chosen Answer
EJ (Philippines): Answer: Question 1 - Yes 1. Sales on account without or low collection during the year 2. Payment of merchandise purchase on account during the previous year Question 2 - Yes 1. Collection of account sold during the previous year 2. Cash purchases of merchandise during the year
2009-12-01 17:52:34
EJ (Philippines): Answer: Question 1 - Yes 1. Sales on account without or low collection during the year 2. Payment of merchandise purchase on account during the previous year Question 2 - Yes 1. Collection of account sold during the previous year 2. Cash purchases of merchandise during the year
2009-12-01 17:52:34
idris w: The first question is possible and yes to it. For example, Consider company A, B, C your customers, company A pays you on time while company B defer his own payment till the following month. As a result of that, you will have a negative cash flows for the month and the positive net income will soon reflects on the future payment received. The same applicable to company C that promise to pay you in the next two or three months. The cash flow statements will looks negative overtime, but that will not stop you from having a positive net income.
Question 2 can be consider on either way; because if a company did not fully engaged on a profitable investment and fail to minimize cost of expenditure, the cash flow might look positive but will ended up in a negative net income.
2009-12-01 18:13:52
2009-12-01 18:13:52