Cash Flow   Term Paper ID:45590 Click to get this paper

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Paper Introduction: seemingly anomalous cash flow profitability relationshipsQuestions How can a company that has a profit also have a negative cash flow in the same accounting period How can a company that has a loss also have a positive cash flow in the same accounting period Seemingly anomalous cash flow profitability relationships as describedin the questions above can occur in companies that follow the accrualmethod of accounting for their financial performance Under the accrualmethod of accounting expenses and revenues are recognized in theaccounting periods Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. In this scenario, thecompany would show a positive cash flow in the current accounting periodbecause the disbursements for accounts payable had not yet occurred. Under the accrualmethod of accounting, expenses and revenues are recognized in theaccounting periods in which they are relevant, as opposed to recognizingexpenses when the accounting periods when actual disbursements occur orrecognizing income in the accounting periods when actual collections occur.The accrual accounting method, in contrast, requires that expense items andincome items be matched to one another in the appropriate accountingperiods (Weygandt, Kimmel, & Kieso, 2 7). Inthis scenario, a negative cash flow would occur in the current accountingperiod. In this scenario, a recognizedprofit would be recognized in the current accounting period. How can a company that has a loss also have a positive cash flow in the same accounting period? D., & Kieso, D. Assume,however, that the company paid in the current accounting period for theresources consumed in completing the project, but that the company had notcollected the full sales price from the customer for the completed work. (2 7). One example of a company that shows a profit and that experiences anegative cash flow in the same accounting period is a company wherein allof the work on a major project was completed in the current accountingperiod, and wherein the recorded sales price exceeded the total expensesthat were charged against the project. E. Seemingly anomalous cash flow/profitability relationships as describedin the questions above can occur in companies that follow the accrualmethod of accounting for their financial performance. New York, NY: John Wiley and Sons. Assume further, however,that the company collected sales revenue for the work completed in thecurrent accounting period, but that the company had not yet paid suppliersfor the resources consumed in completing the work. A company also could experience a situation that is the reverse of theexample described in the preceding paragraph. seemingly anomalous cash flow/profitability relationshipsQuestions: How can a company that has a profit also have a negative cash flow in the same accounting period? ReferenceWeygandt, J. Financial accounting. (6th ed.). Assume that the matchingsales and expenses in the current accounting period resulted in arecognized loss in the current accounting period. J., Kimmel, P. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.