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Explain the Difference between cash and profit
Cash flow statement shows all the cash in and cash out for the organisation for that period. It demonstrates the cash generating ability of the organisation. Income statement on the other hand shows profitability of the business during that period. Income statement is prepared using the accruals concept. This is where revenue and expenses are recognised in the period that they are incurred and not in the period the cash is received or paid. That's why you have a difference between profit andcash.
Accountants should not reverse the adjustment of prepaid insurance to recognize insurance expense at the end of the accounting period because: Answer a. . doing so results in
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Operating profit margin Operating profit margin = (PBIT / Turnover) x 100% This is the ratio of operating profit to turnover or sales. A high operating profit margin is
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make an cash conversion cycle of cabbages
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are footnotes important in analysing ratios
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