What are difference between cashflow statement and income statement?

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Expert Solution

The Following are the Major Differences Between Cash Flow Statement and Income Statement:-

1. The Income Statement is based on Accrual Basis(due/received which is earlier) whereas the cash flow statement is prepared while keeping in mind actual receipts and payment of cash.

2.There are 2 Classifications of Income Statement which is Operating and Non-operating whereas Cash Flow Statement is Divided into three activities i.e Operating, Investing and Financing.

3. Income Statement shows the Profitability of a concern, whereas the Cash Flow Statement shows the Solvency and Liquidity available with the concern.

4. Income Statement is prepared taking into account various records and Ledgers accounts, whereas in order to prepare cash flow statement on needs Income statement and balance sheet.

5. Depreciation along with amortization or any other nonoperating expenses is included while preparing Income Statements but as the same are non-cash items same are excluded while preparing cash flow.

ekkarill92 answered 1 year ago

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