Excel: Why adding negative into the cell?
Why do we need to add negative into the cell to negate the values?
Wouldn't it be better if we know whether the amount is negative/positive to determine positive/negative cash flow?
And in the end, why do we need to remove negative for the net income? I understand it's for validation. But, Can you provide me with a better intuition of doing so?
FYI, I didn't learn about accounting.
1 answers ( 0 marked as helpful)
Hello,
Thanks for your questions.
Here are the answers:
Q1:
We negate because we want to see revenues as positive numbers and costs as negative. Revenues are a source of income and costs are an expense. So, it makes sense to have positive revenues and negative costs.
Q2:
In the end, we want to make a check and verify whether the number we obtained minus Net income, which was reported in the data gives 0. This is why we negate. That's simply a check.
Hope it makes sense.
Best,
Ned