7. a) Is it possible to have a positive net income and negative cash flow from o

Question

7.

a) Is it possible to have a positive net income and negative cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.

b) Is it possible to have a negative net income and positive cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.

7.

a) Is it possible to have a positive net income and negative cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.

b) Is it possible to have a negative net income and positive cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.

Explanation / Answer

Question 1 - Yes

1. Payment to suppliers which is purchased in last year
2. Sales on account but less collection or nil collection during the current year

Question 2 – Yes

1. Huge Cash purchases of merchandise during the year but less sales
2. Collection of Last year sales which is sold on account during the previous year

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