Divergence Between Net Income and Cash Flow May Be Due

question 19

Multiple Choice

Divergence between net income and cash flow may be due to any of the following except

• A)use of the direct method of presenting cash flows from operations.
• B)the company being brand new.
• C)fraudulent financial reporting.
• D)seasonal variations in a company's operations.

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Definitions:

Revenues

The overall income earned from transactions of goods or services central to a business's core functions.

Operating Revenues

The income earned from a company's main business operations, excluding income from investments or secondary sources.

Operating Expenses

The costs associated with the normal operations of a business, excluding costs related to producing goods or services, like rent, utilities, and salaries.

Interest Expense

The cost incurred by a company for borrowed funds, shown as an expense on the income statement.