Why decrease in advance income is subtracted in cash flow statement as it does not results in any cash outflow?
Dear Student,
A decrease in income received in advance implies that actual cash inflows are much lesser​ in comparison to the amount of income recorded in the Statement of Profit and Loss, therefore this decrease must be shown as a deduction from the net profit so as to ascertain the net cash flow from operating activities.
A decrease in income received in advance implies that actual cash inflows are much lesser​ in comparison to the amount of income recorded in the Statement of Profit and Loss, therefore this decrease must be shown as a deduction from the net profit so as to ascertain the net cash flow from operating activities.