Why Doesn't Net Income Equal Cash?
Your friend Andrea is looking at purchasing a small business and has come to you for help. Andrea thinks that there might be some errors in the financial statements, and she wants you to take a look at them.
Andrea is wondering how the business' cash account could be less than it's net income for the past month.
Analyze the financial statements presented below, and then answer the questions that follow:
For the Month Ended November 31, 1997
As at November 31, 1997
1. Why doesn't net income equal the amount in the cash account?
2. If the Net Income isn't in the Cash account, then where might the Net Income have gone?
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