Using the text, search for the term’s “accrual” and “estimate.” Familiarize yourself with these terms. Discuss three examples of accruals and three examples of estimates, and why these concepts of accounting mean that “profit” does NOT equal cash.
a. Why is revenue recognition important to understanding cash flow in a business?
b. Using Starbucks 2019 10-k, search through the document looking for the search term “revenue recognition.” Connect what you find to your response in part a – describe what you have learned about how they recognize revenue and how that impacts their cash flow.
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