Thursday, December 8, 2011
How is Change in Cash related to Net Income?
When looking at a cash flow statement, the "Change in cash and cash equivalents" seems to be unaffected by the "Net Income" at the top of the cash flow statement. How are they related?|||I'm not sure I understand the question. But there are two kinds of statements of cash flows. The direct method and the indirect method. The indirect method is used most often. With the indirect method the starting point is net income from the income statement. Changes in cash are adjusted from accrual accounting from there. And you end up with Change in cash and cash equivalents.
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