Self-test To illustrate the difference between cash and profit you need to complete the following table. In each case state if the transaction affects profit or cash flow or both. Indicate if the transaction increases, decreases or has no effect on the profit and/or cash flow.

Transaction Effect on profit Effect on cash flow Issue of new shares Bad debt written off Goods bought for cash Bonus share issue Dividend paid to shareholders Goods purchased for credit Delivery van purchased for cash