I am tired of getting bullied by accounting jargon during earning reviews…
The depreciation trick
Capital expenditure on assets does NOT figure in the income statement. Instead the money spent will be deducted over the lifetime of the asset as a depreciation expense.
This artificially boosts income since only part of the capex on assets is deducted from profits
depreciation = (asset_value - liquidation_price) / useful_life
Cash/Accrual accounting
The accrual method accounts revenue as soon as the goods/services have been invoiced (but payment may not have been received).
This can explain discrepancies with the cash flow statement of the company