![]() ![]() Cash basis accounting is "all about" CF and little else. Note, incidentally, that for the few firms that use cash basis accounting(instead of accrual accounting), the distinction between cash flow on the one hand and accounting terms (income, revenue, expense, and cost) on the other hand, largely disappears. "noncash" expenses do not appear on the cash flow statement. Cash Flow Reportingįirms report actual CF gains and losses for the period directly on another reporting instrument, the Statement of changes in financial position ( SCFP, or Cash flow statement, or Funds flow statement). These are charges against earnings solely to lower reported income (thereby lowering taxes). ![]() The best known noncash expense is depreciation expense, while others include amortization and writing off bad debts. Tax authorities also allow businesses to report some noncash expenses on the Income statement. Cash flow needs also include the costs of developing new products and upgrading the infrastructure. These include, for instance, paying employee salaries and wages, and paying interest on loans or bonds.
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