Proﬁt differs from cash ﬂow from operations because the revenue recognition and matching principle result in the recognition of revenues and related expenses that are independent of the timing of cash receipts and payments.

Question

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Profit is calculated based on the revenue recognition and matching principle, which means revenues and related expenses are recognized regardless of when cash is received or paid out. Cash flow from operations, on the other hand, focuses solely on the timing of cash receipts and payments. It measures the actual cash inflows and outflows from the company's operations, which may not always align with the revenue and expense recognition.

Proﬁt Differs from Cash ﬂOw from Operations Because the Revenue