Profit Differs from Cash flOw from Operations Because the Revenue

question 49

True/False

Profit differs from cash flow from operations because the revenue recognition and matching principle result in the recognition of revenues and related expenses that are independent of the timing of cash receipts and payments.

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Definitions:

Goodwill

The intangible asset that arises when a company acquires another business for a price higher than the fair value of its net identifiable assets.

Business Combination

A transaction or event in which an acquirer takes control of one or more businesses, such as through merger or acquisition.

Amortized

The process of gradually writing off the initial cost of an asset over a period, in accordance with its estimated useful life.

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but not full control.