"I give up," your friend moaned in frustration after his second year of operating his own business."Another year where the income statement says I made money, but I still had to go to the bank to increase my line of credit, because my cash balances decreased.Is it always like this? This business is never going to work!" Explain to your friend how it is possible for a business to have a positive net income and negative cash from operations.Give an example of one item that could lead to this situation.Would you recommend that your
friend give up?

Question

Quizplus · Accepted Answer

The Answer of "I give up," your friend moaned in frustration after his second year of operating his own business."Another year where the income statement says I made money, but I still had to go to the bank to increase my line of credit, because my cash balances decreased.Is it always like this? This business is never going to work!" Explain to your friend how it is possible for a business to have a positive net income and negative cash from operations.Give an example of one item that could lead to this situation.Would you recommend that your
friend give up?

"I Give Up," Your Friend Moaned in Frustration After His