Explain Why the Net Income Reported on the Income Statement

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Examlex · Accepted Answer

The Answer is Net income on the income statement is an application of the accrual basis of accounting;revenues are reported when earned and expenses incurred are matched to those earned revenues.The net cash flows from operating activities on the statement of cash flows are reported on the cash basis of accounting.That is,amounts received from customers and amounts paid for expenses are on the statement of cash flows.Therefore,the difference in net income and net cash from operating activities is a timing issue.

Explain Why the Net Income Reported on the Income Statement

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