No, there is a distinction between cash flows, and income & expenses. An income or an expense does not require a cash flow, and a cash flow is not necessarily a

No, there is a distinction between cash flows, and income & expenses. An income or an expense does not require a cash flow, and a cash flow is not necessarily an income or an expense. Expenses should not be tied to cash layouts, because: (a) purchases are not necessarily expenses, but may be the buying of income-generating assets (i.e. expense is allocated over the life of the asset in the form of depreciation). (b) You can have an expense without laying out cash (e.g. an asset loses value such as a debtor defaulting).