Income Statement Vs Cash Flow

The statement of cash flows also referred to as the cash flow statement is one of the three key financial statements that report the cash generated and spent during a specific period of time e g a month quarter or year.

Income statement vs cash flow. The statement of cash flows acts as a bridge between the income statement and balance sheet. The information from the income statement links to the information presented in the operations section of the cash flow statement. Financial statements provide a wealth of information about a company and its operations. However net income directly affects the cash presented on the cash flow statement.

Another technique called the direct method can also be used to. The profit or burn on the income statement is then used to calculate cash flow from operations. The bottom line. Income statement vs cash flow statement the key difference between income statement and cash flow statement is the basis that is used to prepare these statements.

Financial statements like the income statement and cash flow statement provide an ongoing record of a company s financial condition and are used by creditors market analysts. A company made revenue of 200 in 2016 and the expenses they have incurred were 110. In order to better understand which statement you should be using it s important to understand what kind of information each statement provides. It is the final destination of the whole process of accounting which comprises of the income statement balance sheet and cash flow statement.

Financial statement refers to the official record of the financial activities and the overall position of the business entity. The net income stated on the income statement is not the same as the amount of cash in a company s possession. A cash flow statement sets out a business s cash flows from its operating activities its financing activities and its investment activities. This is referred to as the indirect method.

The cash flow statement is completely different from that income statement. Let s take an example to understand this. Many investors analysts and creditors refer to a firm s. For the income statement it is the accrual basis whereas for cash flow concept it is mere cash basis.