Cash Flow Statement Vs. Profit and Loss Account
Friday, March 20, 2009
To access the viability of poposed Capital Expenditure Projects, a cash flow statement is better than profit and loss account because it enables users to evaluate the changes in net assets of an entity, its financial structure ( including its liquidity and solvency) and develop models to assess and compare the present value of the future cash flows of different periods because it eliminates the effects of using different accounting treatments for the same transaction and event.
In simple words Profit and Loss accounts present the picture after all cash and on cash items adjustments whereas Cash Flow statements tells cash impact that is very important to assesst the viability of proposed capital expenditure
Labels: accounting
posted @ 4:29 PM,
1 Comments:
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At February 9, 2017 at 3:26 PM,
Unknown said...
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