Question

Dr Tom is considering purchasing a GP centre in the rural area of Torrens Island..

Note: Dr Tom needs to consider accounting information requirements for different stakeholders surrounding his GP centre. For example, lenders would need information regarding the GP centre's ability to repay debt and service a loan.

Explain why it is possible for a company to report a net profit after tax and have less cash in the bank at the end of the year than at the beginning of the year. Is it possible for the reverse to happen - i.e. report a net loss but have more cash in the bank at the end of the year than at the beginning of the year? Give two examples to illustrate your answer.