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Therefore this manipulates the accounting statement in way that income shown is not what the business received and then the concept attempts to spread the cost. Thus the concept provides a false picture as to what cash reserves are available within the business, which could result in serious cash flow problems. For instance, the income ledger may show thousands of dollars in sales, while in reality the bank account is empty because debtors haven't paid you yet, therefore the problems will arise when the debtors finds it hard to pay off the credit, or they might delay with their payment due to unforeseen factors this will then affect the company’s working capital, which is the amount the business have for day to day expenses...
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