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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Net Profit
Why is there a difference between net profit and the bank balance?
Just because I have made a profit of (say) $1,000, it does not mean that I have an extra $1,000 in the bank.
There are lots of reasons.
For example, many of my customers might still be owing me money. They will have recorded as sales (so more profit), but the cash will not have increased.
The profit is after charging depreciation, but depreciation does not involve spending cash.
Money may have been spent buying non-current assets – that means less money in the bank but does not affect the profit.
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