Expert: Arthur Naman - 3/9/2011

Question
Hello,

I know this is an easy question but for the life of me I can not figure it out. I have an increase of net income by 6500.00 and my cash went up only by 800.00. Why is that?

Thank you for any help you can give me.

Melissa

Answer
This is generally more of a problem if the business is on the accrual basis; as opposed to the cash basis.

Often items are accrued even if the business is on the cash basis. For example, payroll taxes are often accrued even when using cash basis.

Also, if expenses are paid by use of credit cards, of if sales are by credit cards, then that also may be the reason for the difference between ending cash and net income.

If you are not able to determine the difference, then let's make arrangements for you to send me the financial information necessary for me to assist you.

p.s. If you are located in or around Austin Texas, then we can meet.

Thanks.