I.Issues
Why does net income not equal cash flows?
Why do we need accrual accounting? (Why do not we fire all accountants and just publish summary bank statements)
Why do the differences between owners’, players’, GAAP and truth number exist?(Can accounting numbers be neutral representations of what happened?
What happens if a retired non-roster player (e.g. Joe Portocararo) returns to the active roster while continuing to earn the same money promised him in his guaranteed contract?
Of what importance are the periodic net income numbers if the clubs can always be sold for huge profits?
How should Bill Ahern resolve the accounting conflict between the owners and players?
How much did the Kansas City Zephyrs Baseball Club earn in
Cash flow measures cash in and cash out, while net income includes several non-cash variables. It is why they do not equal to each other because there are expenses like depreciation and amortization that are not cash expenses. Moreover, once they pay the players’ salary, these expenses were on the previous month’s income statement, and the cash flow would not be affected. So, it is obvious that two of them will not be equal. a. Why do we need accrual accounting? (Why do not we fire all accountants and just publish summary bank statements) Accountants help to ensure that firms are run efficiently, public records kept accurately, and taxes paid properly and on time by the rules of Generally Accepted Accounting Principles (GAAP). We need accountants because they are trained to handle tough financial situations. They know what investments are wise, what we can afford, and how we can increase our wealth.
Why do the differences between owners’, players’, GAAP and truth number exist?(Can accounting numbers be neutral representations of what happened?)
The differences between the owners, players, exist because they are both calculate the in various ways at a time under the rules by GAAP. The owner’s financials are also accounted because it is a corporation as well. Depreciation, amortization of players might be an issue if the players are in the non-roster list or call off injury. However, whatever ever happens, has to be followed the GAAP rules.