Answer:
1. Net income is $492,522
2. Net cash flow is $415,388
3. Cash flow statement
Explanation:
1. The formula to compute the net profit is shown below:
= Sales - the cost of good sold
= $820,000 - $327,478
= $492,522
2. The formula to compute the net cash flow is shown below:
= Cash receipts - the cost of goods sold
= $742,866 - $327,478
= $415,388
3. For a finance manager, the cash flow statement is more useful than the income statement as the cash flow statement tells the positions of cash whereas net income tells the net profit or loss of the company.
It does not tell how much money is to be paid, or how much collection is collected during a particular year
Using accrual accounting and the preceding values, show the firm's net profit for the past year is $492,522.
a. Net profit
Net profit= Sales - the cost of good sold
Net profit= $820,000 - $327,478
Net profit= $492,522
b. Net cash flow
Net cash flow= Cash receipts - the cost of goods sold
Net cash flow= $742,866 - $327,478
Net cash flow= $415,388
c, What is more useful for the financial manager is the cash flow statement reason being that it recognizes the amounts that will not be collected.
Inconclusions using accrual accounting and the preceding values, show the firm's net profit for the past year is $492,522.
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