Profit vs Cash Flow: What's the Difference?

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alexnet
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Profit and cash flow are not the same thing...

Profit measures whether a business has earned more revenue than it has incurred in expenses. And cash flow measures how much cash actually moved in or out of the bank account

A business might make a sale today and receive the cash later. Or use a service today and pay the bill next month.

So the question is: When should revenue and expenses be recorded?

When cash changes hands, or when the work is actually done.

This is where accounting methods come in. These are the rules businesses use to decide when revenue and expenses should be recorded.

The two main methods are:

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