Marie works in a hospital. She just received her FIRST set of financial statements from her accountant. She is upset. The statements show a CASH BALANCE of 3600 at the end of the month, but a NET INCOME of only 500. Is this situation possible? Should Marie find another accountant?
Please explain this situation to me.
Cash Balance, Net income?debt consolidation loan
yes receivables were taken early and are showing up in offsetting transactions!!! accountant is correct!!!
Cash Balance, Net income? loan
Its it of course possible, cash is a %26quot;real%26quot; account, meaning its is balance %26quot;as of%26quot; date, while income is a %26quot;nominal account%26quot; meaning that the balance is only from the current period. The cash account balance being much higher than the income balance maybe due to collection of receivables, for which the related income was already recognized in the past periods. Anyway this case is common to all business.. the accountant most likely is correct.
No comments:
Post a Comment