Calculating cash flows requires that a small business owner be able to distinguish between sales revenue and cash receipts and between expenses and disbursements.

Question

Quizplus · Accepted Answer

This statement is true. Cash flow analysis involves tracking the actual cash transactions that occur, which can be different from sales revenue and expenses recorded on an accrual basis. Sales revenue may not result in immediate cash receipts if customers are given credit terms, while expenses may be paid out at a different time than when they are recorded. It is important for a small business owner to be able to identify these differences in order to accurately calculate their cash flow.

Calculating Cash Flows Requires That a Small Business Owner Be