Net Income is the balance amount obtained after deducting the Operating Expenses and Cost of Goods Sold(Trading Expenses) from the Net Revenue(Sales - Sales return) earned by the company in the Financial year(One year typically). Where as Net Cash in the cash balance or readily available cash in the business which is totally liquid.
Why the Net cash and Net Income amount figure Differs?
The Main reason for the difference in the amount is because of the accounting concept the company uses. When the company uses the "Accrual accounting concept", it take both the Cash and Credit sales in account, irrespective of cash received on credit sales or not.
Which means, the company will take its credit sales as actually Sales, even it dint received the cash from the customers. When such event occurs, for example, the INCOME STATEMENT Shows in this way.
Net Sales(Includes Credit Sales of $5000) - $10,000
Less: COGS and Operation Expenses - $2,000
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NET INCOME - $8,000
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Well in the CASH FLOW STATEMENT, only those transaction are taken where actual cash Inflow or outflow occurs, not all transactions. The Cash Flow shows in this way.
Net Cash Sales - $5,000
Less: COGS and Operation Expenses - $2,000
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NET CASH - $3,000
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Now, I hope you understood why there is an change in amount figures.
The Main reason for the difference in the amount is because of the accounting concept the company uses.
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