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1. Do you see any problems with treating net operating cash flows as being the same as net profit when 100% of cash is not

1. Do you see any problems with treating net operating cash flows as being the same as net profit when 100% of cash is not paid or received in a year?

2. What should Cade Company be recording as its income for years 1 through 3?

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Cade Company Income Statements Year 1 Year 2 Year 3 Total Sales on credit $ 60,000 $60,000 $60,000 $180,000 Cash receipts from customers $ 20,000 $70,000 $90,000 $180,000 Cash disbursements for: Salaries to employees (30,000) (30,000) (30,000) (90,000) Insurance for 3 years (12,000) (0) (0) (12,000) Supplies (3,000) (7,000 (5,000 (15,000) Net operating cash flows $(25,000) $33,000 $55,000 $ 63,000

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