Explain the Differences Between the Statement of Cash Flows and the Income

Question

Examlex · Accepted Answer

The Answer is The cash flow statement reflects the cash position, while the income statement is prepared on an accrual basis and reflects the profitability of a company. The cash flow statement also includes information on investing and financing activities as opposed to mainly operating activities as found in the income statement. The income statement does not reflect many of the transaction a firm has with its creditors, nor does it capture many of the cash payments or receipts for PP and E.

Explain the Differences Between the Statement of Cash Flows and the Income

Definitions: