Explain the difference between profit and cash. Use information in the cash budget (Appendix B) and the income statement (Appendix D), respectively, to illustrate the difference.

Appendix B: Cash Budget for James Freeman and Family Enterprise for the year 2020- Q24 Q34 Q4 Totale Q12 RECEIPTS (INFLOWS): CASH SALE (60%) 60,000+ 1 MONTH CREDIT SALES (40%) 40,0004 ADDITIONAL CAPITAL 40,000+ 72,000+ 40,0004 120,000 48,0004 180,000 80,000 432,0004 208,0004 40,000 TOTAL INFLOWS 140,000 168,000 260,000 112,000 ( 680,000 50,000 90,000 120,000 PAYMENTS (OUTFLOWS): PURCHASES PURCHASE OF EQUIPMENT ADMIN. WAGES / SALARIESA 40,000 180,000 5,000 10,000 300,000 180,000 26,000 52,000 5,000 12,000 6,000 14,000 10,000 16,000 TOTAL OUTFLOWS 235,000 67,000 110,000 146,000 558,000 (95,000) 45,000 58,000 114,000 122,0004 NET CASH FLOW [SURPLUS/(DEFICIT)] OPENING BALANCE CLOSING BALANCE 35,000 (60,000) (60,000) (15,000) 43,000 (15,000) 43,000 157,000 35,000 157,000+ Appendix D: Income Statement of Janet Zhang for the period ended 31st December 20194 E f Net Sales: Sales 111,600 Sales returns (1,500) 110,100 LESS: Cost of sales: Opening inventory 14,208 Purchases 71,244 Carriage in 1,8604 Purchases returns (2,6 02) 84,710 LESS: Closing inventory (18,000) (66,710) Gross Profit 43,390 Add: Other incomes: 0 43,390 LESS: Expenses: Carriage out 1,200 Salaries & Wages 22,6404 Rent & Rates 1,824 Insurance 1,000 Motor expenses 2,856 Telephone 2,624 Electricity 996 General expenses 1,884 (35,024) Net Profit 8,366