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Is it possible to have a negative net income and positive cash flow?
Wiki User
∙ 16y ago
Yes and No. If the method of accounting followed is Mercantile, Yes. If the method of accounting followed is Cash System, No. In Mercantile method of Accounting, Negetive Income represents the excess of expenditure over income. In this method; Income and Expenditure considered are on accrual basis, i.e., income or expenditure is taken as such in the books of account; the moment a right to receive income or a liability to pay for expenditure has crytallised. The movement fo cash into the business or out of business is not the criteria. Therefore, inspite of a negative income in a particular year, a business may have a positive Cash flow on account of excess of cash flow arising out of previous years income, which is held as an asset in the form of Sundry Debtors, over the payments made in respect of previous years expenditure which is held as a liability in the form of Sundry Creditors on the balance sheet.
Wiki User
∙ 16y ago
Wiki User
∙ 12y agoYour income is paid into a bank, and you can't get to the bank.
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Wages are paid cash and not in a bank account is it possible to get a loan?
I doubt it, without proof of income
Why one firm could have positive cash flows and be headed for financial trouble while another firm with negative cash flows could actually be in a good financial position?
It all depends on how they run their business. If the one with positive cash flow has a lot of debts, they are going to lose out.
What are the effects of negative cash flow?
effect of negative cash flow
Is depreciation a source of fund?
Some people state that depreciation is a source of funds or a source of cash. I disagree. Depreciation expense is reported as a positive amount on the statement of cash flows prepared under the popular indirect method. However, the reason it is listed is to adjust the net income amount that had been reduced by depreciation expense on the income statement. (Recall that the depreciation entry debits Depreciation Expense and credits Accumulated Depreciation-the cash account is not involved.) In other words, the positive depreciation amount reported on the statement of cash flows is merely one of the adjustments needed to convert the accrual net income to the cash provided from operating activities. Depreciation is not a source of cash. Let's illustrate this with some amounts. A sidewalk florist operates a cash only business. During the most recent year, this florist had cash revenues of $100,000. Its expenses included $70,000 of cash expenses and $8,000 of depreciation expense on its truck that was purchased in an earlier year. During the year there were no other revenues or expenses, and the florist's cash balance increased by $30,000. The florist's income statement will report net income of $22,000 (revenues of $100,000 minus expenses of $78,000). The florist's statement of cash flows prepared under the indirect method will begin with net income of $22,000. It will then add the $8,000 of depreciation expense. The result is cash provided by operating activities of $30,000-which agrees to the business's change in its cash balance. The $8,000 of depreciation expense was not a source of cash, even though it appears as a positive amount on the statement of cash flows.
What are the advantages of a fee income?
You get it in cash
Can cash flow from operation be positive if net income is negative?
Yes, cash flow can be positive while net income is negative.
Is it possible to have a negative net cash flow but positive cash on the balance sheet?
Yes. In this case you should see that the cash balance decreased during the period.
What is different between positive cash flow and negative cash flow?
positive cash flows are inflows while negative cash flows means cash out flow from different activities.
Is The increase of AP on the statement of cash flow positive or negative?
positive as the cash flow
Does the increase of AP on the statement of cash flow show a negative or positive effect on cash flow?
The increase of A/P on the statement of cash flow show?
What is negative and positive and neutral cash flow?
NEGATIVE CASH FLOW IS WHEN YOU SPEND MORE MONEY THAN YOU HAVE COMING IN POSITIVE IS THE OPPSITE WHEN YOU MAKE MORE THAN YOU SPEND AND NUETRAL IS WHEN YOU BREAKE EVEN
Is it possible for a company to have a profit and a negative cash flow?
No
Why is your Mafia Wars cash flow a minus when the total income is a positive?
It's negative because you own weapons, etc. that cost more (upkeep) than your income is. If you're making $500,000 every hour but your upkeep is $750,000 then you're losing $250,000 every hour.
Is AR a positive balance sheet entry that has a negative effect on Net Cash?
True
What is conventional projects?
A project with a negative initial cash flow(cash out flow),which is expected to followed by one or more future positive cash flows(cash inflows) is called conventional project.
Can you have a positive revenue but negative in expenses?
Yes. For example if a supplier gives you a refund or a cash incentive to shop with him/her.
Wages are paid cash and not in a bank account is it possible to get a loan?
I doubt it, without proof of income
