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Q: How do cash flow statements validate income statements and balance sheets? ( No Answer,   1 Comment )
Question  
Subject: How do cash flow statements validate income statements and balance sheets?
Category: Business and Money
Asked by: migh10-ga
List Price: $2.00
Posted: 25 Nov 2002 12:23 PST
Expires: 02 Dec 2002 09:05 PST
Question ID: 114377
How do cash flow statements validate income statements and balance sheets?
Answer  
There is no answer at this time.

Comments  
Subject: Re: How do cash flow statements validate income statements and balance sheets?
From: poohbah-ga on 01 Dec 2002 22:35 PST
 
I don't fully understand your question but I’ll try to help.

The income statement covers a period of time, such as 3 months or a
year. The balance sheet is a snapshot at a certain point in time (e.g.
11:59am on 12/31/01). This means that these statements are very
different in what they are showing and what they can communicate to
the business owner/manager.

The cash flow statement takes elements from both the income statement
and the balance sheet to show why your cash balance changed. The
importance of the cash flow statement is that, starting from your net
profit, it can break down where your cash is coming from or going to.
A company with net profits is not necessarily adding cash. In fact, a
profitable company with poor cash controls can quickly go bankrupt.

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