Compare Net Income (Loss) for the Year to Net Cash

question 58

Essay

Compare net income (loss) for the year to net cash flow from operating activities. Why are these amounts different? Briefly explain.

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding direct labor and direct materials, such as rent, utilities, and office supplies.

Prepaid Expenses

Payments made for goods or services to be received in the future, recorded as assets until they are fully utilized or consumed.

Preferred Stock Dividends

Payments made to holders of preferred stock, typically fixed and paid out before dividends to common stockholders.

Financing Activities

Transactions related to raising funds or capital for a company, including issuing debt and equity.