Accounting Foundations

Core

Three statements, accruals, working capital, and common interview adjustments.

Net income from the income statement is the first line of cash from operations and, after dividends, flows into retained earnings on the balance sheet. D&A is a non-cash expense: it is added back in cash from operations and reduces PP&E. Cash from operations, investing and financing sum to the net change in cash, which updates the balance sheet cash line.

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