Accounting theory:: In business, Statement of Profit or Loss - TopicsExpress

Accounting theory:: In business, Statement of Profit or Loss (SOPL) is sometimes useful because we can identify the net profit between the revenues and expenses. But it is not neccesary that net profit shows how well is the business. Therefore, there is another statement called Statement of Cash Flow (SOCF) where we can determine the cash in and cash out throughout one period. Unlike the SOPL, we only can determine the final amount on the final accounting period. If the cash in of business is less than cash out, even though the figure in SOPL shows that it gains more revenues, means that theres something wrong with that business. In conclusion, SOCF is very effective for the cash in business as it is a crucial asset. #FAR160 #CashFlow

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