A Company May Appear to Be Profitable on Its Income

question 86

True/False

A company may appear to be profitable on its income statement, but fail to generate strong cash flows.

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Definitions:

Vacation Pay Expense

The cost incurred by an employer for the amount of vacation time accrued to employees.

Payroll Register

A detailed document that lists employees' pay rates, hours worked, deductions, and net pay during a pay period.

Total Net Pay

The amount of money an employee receives after all deductions, including taxes and benefits, have been subtracted from their gross pay.

Payroll Checks

Payroll checks are written documents issued by an employer to pay an employee for services rendered.