| Course | AC112 Accounting Fundamentals for Management |
|---|---|
| Unit | Unit 6 |
| Paper type | Discussion board post |
| Length | About 530 words, 2 pages double-spaced |
| Format | APA 7 discussion post |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC112 Unit 6
A $2,700 Month and $6,905 Less in the Bank: A Unit 6 Discussion on Why Profit and Cash Parted Ways at a Grooming Salon
AC112 · Unit 6 Discussion
Posted by [Student Name]
The salon and its April figures are composite; the accruals study and the small business cash report cited are real.
Initial Post
My example is a one-owner dog grooming salon in its second month. April's income statement shows net income of $2,700. Yet the bank balance fell $6,905. Here is where the money went.
First, the salon opened accounts for a boarding kennel and a veterinary clinic that refers clients, both on thirty-day terms. Receivables rose $2,100. That revenue is real, but the cash will not arrive until May.
Second, the owner bought a used cargo van to pick up and deliver dogs, for $14,000, paying $4,900 down and financing the rest. The $4,900 left the bank, but none of it is an expense in April. The van will be expensed gradually through depreciation over its life.
Third, the owner repaid $305 of principal on the equipment note and withdrew $3,000 for personal living costs. Neither appears on the income statement.
Fourth, depreciation on the grooming equipment reduced profit by $300 without costing a dollar this month, and unpaid supply bills rose $400, which kept cash in the account a little longer.
The rough bridge looks like this. Operating: net income $2,700, plus depreciation $300, minus the $2,100 rise in receivables, plus the $400 rise in payables, equals $1,300. Investing: minus the $4,900 down payment. Financing: minus $305 principal and minus $3,000 withdrawn, or $3,305. Total: $1,300 minus $4,900 minus $3,305 equals a decrease of $6,905.
The salon did not lose money in April; it turned most of its profit into receivables and most of its cash into a van, and then the owner took out more than the business generated from operations.
Research comparing earnings with cash flows explains why both matter. Earnings smooth out the timing of collections and purchases, which makes them a better measure of a month's performance, while cash flows show what can actually be spent (Dechow, 1994). For a small business, the second view is often the more urgent one. A study of nearly 600,000 small businesses found that the median firm held only enough cash to cover 27 days of typical outflows (Farrell & Wheat, 2016).
What should the owner change? She could ask the two accounts to pay within fifteen days or by card at pickup, and she could set her withdrawals at what operating cash, not profit, supports, which in April was closer to $1,300 than $3,000.
Question for classmates: when a business must choose between the larger customer on credit terms and the smaller one who pays at the counter, how would you decide?
Reply to Tasha
Tasha, I agree that the landscaping company's winter months explain most of its cash gap. I would add the equipment loan you mentioned. If principal payments continue through December while revenue stops, the financing outflow becomes the largest line in the bridge. Did the owner consider asking the lender for seasonal payments?
References
Dechow, P. M. (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics, 18(1), 3-42. https://doi.org/10.1016/0165-4101(94)90016-7
Farrell, D., & Wheat, C. (2016). Cash is king: Flows, balances, and buffer days. JPMorgan Chase Institute. https://www.jpmorganchase.com/institute/all-topics/business-growth-and-entrepreneurship/report-cash-flows-balances-and-buffer-days
AC112 Unit 6 instructions, in plain terms
The sixth AC112 unit usually asks for a discussion post explaining why a business can be profitable while its cash falls. Choose or build a small business with consistent figures and give its profit and its change in cash. Then account for the gap in plain language, item by item: sales on credit, assets bought with cash, loan principal, owner withdrawals and noncash expenses such as depreciation. Group the items into operating, investing and financing activity in a rough bridge, without preparing a full statement unless asked. Close with what the manager should do differently. Keep the post focused, around 400 to 500 words. Cite a source where it supports your explanation. Replies should add a missing item or test a classmate's reasoning, with APA 7 citations.
How the AC 112 Unit 6 example is put together
The sample states April's net income of $2,700 and the $6,905 fall in cash, then explains four moves. Kennel and veterinary clinic accounts on thirty-day terms raised receivables. A used cargo van for picking up dogs took a $4,900 down payment. The owner repaid principal and withdrew $3,000. Depreciation and unpaid supply bills worked the other way. A bridge in three lines adds to the exact decrease: operating plus $1,300, investing minus $4,900, financing minus $3,305. The highlighted sentence gives the one-line explanation. A paragraph cites research on earnings and cash flows and a JPMorgan Chase Institute report on how many days of outflows small firms keep in the bank. The post recommends faster collection terms and lower withdrawals, asks classmates a credit-terms question and replies to one about a landscaping company.
AC112 Unit 6 rubric: what earns full points
Cash flow discussions in AC112 are scored on a correct explanation of why profit and cash differ, supported by consistent numbers. Each item in the gap should be explained in plain terms and placed in the right category. A bridge that reconciles exactly earns more than an approximate one. Recognizing that depreciation is noncash and that loan principal and withdrawals never appear on the income statement are common scoring points. The recommendation for the manager reflects the course's management focus. Sources support the explanation. Replies are judged on what they add. Purdue Global discussion deadlines usually carry points, and clear writing with APA 7 citations completes the rubric.
AC112 Unit 6 help from the desk
Many cash flow posts list causes without numbers, so the gap is never actually explained. Others treat depreciation as a cash outflow or count loan principal as an expense. The owner's withdrawals are often forgotten. Some students prepare a full statement of cash flows, which overshoots a discussion prompt. A bridge that stops short of the bank balance's real movement leaves part of the gap unexplained. The recommendation is missing or vague. Replies only agree. If your business example is ready but the bridge will not reconcile, a writer can build the post and bridge from your figures.
Get an AC112 Unit 6 example written to your instructions
Tell us which kind of business the post should follow, perhaps one from your own work, and forward the Unit 6 discussion prompt and whatever rubric accompanies it. Within 24-48h a post comes back built on that business. As a first custom sample it is free, and the reasoning stays visible so your own version can differ. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
More AC112 papers and BS in Accounting samples
- AC112 Unit 1: Why Managers Read Entries Post
- AC112 Unit 2: Transaction Analysis Exercise
- AC112 Unit 3: Trial Balance Problem and Note
- AC112 Unit 4: Adjusting Entries Set
- AC112 Unit 5: Financial Statement Preparation
- AC112 Unit 7: Ratio Interpretation Memo
- AC112 Unit 8: Seminar Reflection
- AC112 Unit 9: Budget Schedule
- AC112 Unit 10: Management Report
AC112 Unit 6 questions, answered
Can the business in my post be invented?
Most AC112 sections accept an illustrative business as long as the figures are consistent and the scenario is plausible. A business drawn loosely from work, with identifying details removed, often reads more convincingly. What matters to the grader is that each reconciling item is named and moves the bridge in the right direction, not whether the company exists.
Do I need to prepare a full statement of cash flows?
Unit 6 is usually a discussion, not a statement exercise, so a formal indirect-method statement tends to overshoot the prompt. A short written bridge from profit to the change in cash, naming the three activity categories, shows the same understanding in a form classmates can reply to. A few sections do ask for the statement, and their prompt says so.
Why does depreciation make the gap smaller rather than bigger?
Depreciation reduces reported profit, but no cash leaves the business when it is recorded; the cash left when the equipment was bought, possibly years earlier. So when reconciling profit to cash, depreciation is added back. In a month where cash already trails profit, that add-back narrows the difference a little, which is why the post treats it last.
Where can I find a free AC112 Unit 6 sample paper?
This page offers a complete AC112 Unit 6 cash flow discussion post explaining why a grooming salon earned $2,700 while cash fell $6,905, with a three-line bridge and a reply.
Where did the cash go in the AC112 Unit 6 sample?
Most went into receivables from two accounts on thirty-day terms and a $4,900 van down payment. Loan principal and a $3,000 owner withdrawal took the rest, while depreciation reduced profit without using cash.