If a Company Reports a Large Amount of Net Income

question 78

Multiple Choice

If a company reports a large amount of net income on its income statement during a year, the firm could have

• A) positive cash flow.
• B) negative cash flow.
• C) zero cash flow.
• D) all of these choices are correct.

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Definitions:

Residual Value

The projected valuation of an asset at the completion of its operational life.

Capital Lease

A lease agreement that has the characteristics of a purchase agreement, where the lessee assumes some risks and benefits of ownership.

Direct Lease

A rental agreement directly between the landlord and tenant, excluding any subleasing arrangements.