Accrual income versus cash flow for a period The Motor Corporation sold vehicles for $500,000 to one specific dealer during the year. At the end of the financial year, the dealer still owed The Motor Corporation $350,000. The cost of the vehicles sold was $400,000, and this cost was incurred and paid by The Motor Corporation.

a. Determine the firm’s net profit for the past year using the accrual basis of accounting.

b. Determine the firm’s net cash flow for the past year using the cash basis of accounting.

c. The accountant and financial manager need to present the results to the CEO of The Motor Corporation. What will be their message regarding the performance of the corporation?
Personal Finance Problem