会计利润与现金流量关系研究

重庆邮电大学本科毕业设计（论文）

outlay. To convert your accrual profit to your cash flow profit, you need a balance sheet for the beginning and end of the period under examination.

As a general rule, you can convert your accrual net profit using the following formula:

Net Profit + Depreciation

- Increases (or + Decreases) in Accounts Receivable - Increases (or + Decreases) in Inventories + Increases (or - Decreases) in Accounts Payable

- Decreases (or + Increases) in Notes Payable (Bank Loans) = Net Cash Flow

Understanding Depreciation and Cash Flow

Depreciation is an expense deducted from your business income to reflect the annual cost of assets used in your business. Since the depreciation deduction is purely a \of accounting, depreciation must be added back to your accrual net profit to determine your cash flow profit.

Dealing with Changes in Various Financial Items

Do you use the accrual method of accounting but want to compute your cash flow profit?

If so, any increase in accounts receivable must be subtracted from your accrual net profit because it represents sales included in the net profit, but not yet collected in cash. Similarly, to determine your cash flow profit, any decrease in accounts receivable must be added to your accrual net profit because it represents cash collections that are not included in the net profit for the current accounting period.

Tip：

These adjustments are fairly simple if you think about the reasoning behind the adjustments.

In terms of accounts receivable, when a sale is made to a customer, the sale is recorded and the customer's credit account is increased by the amount of the sale. When the sale is recorded, your accrual income is increased by the amount of the sale, but no cash is collected until the customer pays his bill. To convert your

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重庆邮电大学本科毕业设计（论文）

accrual net profit to cash, you must subtract an increase in accounts receivable. The increase represents income that has been recorded but not yet collected in cash.

A decrease in accounts receivable has the opposite effect — the decrease represents cash collected, but not included in income.

Changes in Inventory

If you use the accrual method of accounting, any increase in inventory must be subtracted from your accrual net profit amount to determine your net cash flow profit. The increase in inventory represents an expense that was paid but not yet subtracted from your accrual net profit. Under the mechanics of accrual accounting, the purchase of inventory is not considered to be an expense until the inventory is sold. In terms of a cash flow, you've already paid for the inventory; therefore, it must be subtracted from your accrual net profit.

Similarly, a decrease in your inventory amount must be added to your accrual net profit to determine your net cash flow. The decrease in inventory represents an expense subtracted from your accrual income to determine your accrual net profit. However, no cash left your business in this accounting period for the expense reflected by the decrease in inventory.

Changes in Accounts Payable

If you use the accrual method of accounting, any increase in accounts payable must be added back to your accrual net profit to determine your cash flow. Under the accrual method of accounting, an account payable is recorded and an expense is increased when you receive a bill. Therefore, your accrual net profit is reduced by an expense that has not yet been paid in cash. Adding back the increase in accounts payable will adjust the accrual net profit so that it does not reflect the amount of expense not yet paid with cash or with a check.

A decrease in accounts payable must be subtracted from your accrual net profit to determine your cash flow. The decrease in accounts payable represents the net cash that was paid out of your business but not reflected as an expense in

determining your accrual net profit for this accounting period. Under the mechanics of accrual accounting, the expenses associated with the accounts payable were recorded at the time the bills were received.

Changes in Notes Payable

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重庆邮电大学本科毕业设计（论文）

For accrual method taxpayers, an increase in the amount of notes payable (bank loans) must be added to your accrual net profits to determine the cash flow of your business. Under the accrual method of accounting, a loan is recorded by increasing the amount of cash received from the loan, and increasing the amount of notes payable. No part of this transaction is reflected in your accrual net profits. Therefore, to determine your cash flow, you must add the increase in notes payable to your accrual net profit to reflect the real change in your cash balance.

Similarly, a decrease in the amount of notes payable must be subtracted from your accrual net profits. Like the increase in notes payable, no part of the transaction to record a principal payment on a note payable is reflected in your accrual net profit. Therefore, it must be subtracted from your accrual net profit to determine the real effect on your cash flow.

Figuring Your Actual Cash Flow

Businesses using the accrual method of accounting must make some adjustments to determine your actual cash flow. These adjustments are necessary because certain accrual accounting transactions are taken into account to determine your accrual net profit, even though these expenses do not currently require a cash outlay.

The following example looks at the adjustments necessary to convert the accrual profits of Bug Busters Exterminating Service to its cash flow for its year ending December 31, 2011.

To convert its accrual profit to its cash flow profit, Bug Busters will need balance sheets from the beginning and end of the period it wishes to examine. In this case, Bug Busters will examine the period starting on January 1, 2011, and ending on December 31, 2011. Below is the comparative balance sheet provided by Bug Busters' accountant for December 31, 2009, and December 31, 2010:

Bug Busters Exterminating Service Comparative Balance Sheets 12/31/10 $4,375 12/31/09 Cash $17,845 - 39 -

重庆邮电大学本科毕业设计（论文）

Accounts Receivable Inventory Property and Equipment Less: Accumulated Depreciation Total Assets Accounts Payable Notes Payable (Bank Loans) Total Liabilities Stockholder's Equity Total Liabilities and Equity 12,185 6,034 83,239 (44,826) $74,477 $6,977 27,500 $34,477 $40,000 $74,477 27,371 9,133 83,239 (48,989) $75,129 $7,630 12,000 $19,630 $55,499 $75,129 The conversion process also requires an income statement for the end of the period under examination. The income statement of Bug Busters Exterminating Service for the year ending December 31, 2011 is presented below. The income statement was prepared using the accrual method of accounting. Sales Less: Cost of Goods Sold Gross Profit Less: Operating Expenses Less: Depreciation Net Profit Bug Busters Exterminating Service Income Statement December 31, 2011 $267,189 132,122 $135,067 (115,405) (4,163) $15,499 - 40 -