3.7.1—Profit and cash flow Topic Practice
3.7.1—Profit and cash flow Topic Practice
Students practise explaining the fundamental distinction between profit as an accrual-based performance measure and cash flow as a timing-based record of actual fund movements.
How this is tested
- explain how profit reflects revenue minus expenses on an accrual basis, while cash flow tracks actual inflows
- distinguish profit from cash flow by linking each to its purpose: profit measures financial performance; cash flow