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Diploma in Higher Education Studies

Profit is not the same as cash

HES 201 · Introductory Accounting — Week 11 of 16

CourseHES 201
Week11 of 16
SemesterII
TutorOnline in the course chat

This week’s topics

Profit is not the same as cash

  1. Why a profitable business can run out of cash
  2. Timing of payments

What you will be able to do

  • 3.3 Distinguish between profit and cash flow.

Activity

Explain, with numbers, how a profitable firm ran short of cash.

Study materials

Further resources

  • Principles of Finance 2e, ch. 4.1: Cash versus accrual accounting · PDF · OpenStax (2026); pp. 100–101 · for registered students
  • Introduction to Business 2e, ch. 14.6: The statement of cash flows · PDF · OpenStax (2026), why profit and cash differ; pp. 490–491 · for registered students
  • Principles of Finance 2e, ch. 19.1: What is working capital? · PDF · OpenStax (2026), timing of payments; pp. 554–562 · for registered students
  • Thriving Through Seasonal Cash Flow Challenges: Strategies for Seasonal Small Businesses · Open-access article · Busila (2025), Small Business Institute Journal. Profitable seasonal firms can still run short of cash: timing of income and payments. · for registered students
Materials marked “for registered students” open in the student portal, which is set up as soon as you receive final acceptance.
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Course plan
  • Week 1: Why businesses keep financial records
  • Week 2: Who uses accounts?
  • Week 3: Income, expenses and profit
  • Week 4: Assets, liabilities and capital
  • Week 5: The accounting equation
  • Week 6: Double entry: debits and credits
  • Week 7: Recording sales, purchases and cash
  • Midterm: Midterm evaluation
  • Week 9: The income statement (profit and loss)
  • Week 10: The balance sheet
  • Week 11: Profit is not the same as cash
  • Week 12: Cash flow forecasts
  • Week 13: Ratios: how profitable is the business?
  • Week 14: Ratios: can the business pay its bills?
  • Week 15: Review and coursework completion
  • Final: Final assessment and submission
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