Question
Hardware Suppliers reports a net income of $165,000. Included in net income is gain on the sale of land $20,000. A comparison of this year's
Hardware Suppliers reports a net income of $165,000. Included in net income is gain on the sale of land $20,000. A comparison of this year's and last year's balance sheets reveals an increase in accounts receivable of $35,000, and increase in inventory of $20,000, and a decrease in accounts payable of $55,000.
What information does the operating cash flows convey about the business operation? (Let's assume the net income reported in the income statement of last year is the same of this year). The operating cash flows essentially is to reverse net income (GAAP accrual basis income) to arrive at the actual cash received (cash-basis income). So, what does that mean?
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