All such moves can be perfectly legal and perfectly consistent with accounting standards, but they will make the bottom line of the income statement look very different depending on which tactics the accountant chooses. (This is known as “the gap in GAAP.”) Unless you’re financially sophisticated, you can be fooled by clever accounting. And if you run your own business, what you really want to know isn’t just the bottom line on an income statement, which is subject to all these accounting manipulations, but also how much cash is actually flowing into (and out of) your bank account. This brings
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