Suppose a Company Generally Records Revenues and Expenses Before Receiving

question 95

Multiple Choice

Suppose a company generally records revenues and expenses before receiving or making cash payments. Which of the following statements is NOT true?

• A) If sales are falling, net losses could occur even though the company reports net cash inflows from operating activities.
• B) If sales are rising, net profits could occur even though the company reports net cash outflows from operating activities.
• C) Net income and cash flows will always agree because even though revenues and expenses can be recorded in different time periods than their related cash flows the differences will cancel out and the results will be the same.
• D) When the indirect method is used, net cash flows from operating activities includes adjustments for non-cash expenses such as depreciation which would cause net cash from operating activities to be different from net

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Definitions:

Icarus

In Greek mythology, a young man who attempted to escape Crete by wings made of feathers and wax, but flew too close to the sun, causing his demise.

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A collection of short moral stories attributed to Aesop, a storyteller believed to have lived in ancient Greece.

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The process of serious thought or consideration, often involving the examination of one's own beliefs, actions, and experiences.

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A structure built to span a physical obstacle, such as a body of water or road, to provide passage over it.