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Difference between cash and profit

Difference between cash and profit

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Difference between cash and profit

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  1. Difference between cash and profit • Cash is considered cash and cheques • It’s a liquid asset of the business • Cash is the inflow of money into the business bank account (actual money received, rather than what is ‘promised’) • Cash also flows out of the business – e.g. paying suppliers bills. • Not all bills are paid by cash – many are on credit terms

  2. Profit • This is measured by taking the costs away from the sales revenue • It’s different from cash because profit is the money earnt by the business, and is represented on paper (in the accounts) • Because sales can be made on credit terms, not just cash, then it’s different to cash flow