Julia, the CEO of the McPike Company, is pleased to see that the companys Statement of Financial Performance shows a net profit of $300,000. She thinks that McPike should not have any problem to repay the debt of $250,000 to the bank right now, as all other expenses incurred by the company are less than $50,000. The accountant says this could be wrong, because:

Net profit is measured in cash The Statement of Financial Performance is prepared on accrual basis The debt can be repaid on credit The Statement of Financial Position does not reflect debt