The Persistence of Operating Income as Compared to Cash Flows

question 43

Multiple Choice

The persistence of operating income as compared to cash flows from operations is consistent with GAAP requiring the use of __________ accounting for financial reporting purposes.

• A) cash-basis
• B) accrual-basis
• C) tax-basis
• D) cost-basis

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Definitions:

Lowest Terms

The simplest form of a fraction, where the numerator and denominator are reduced to their smallest values.

Fractions

Mathematical expressions representing parts of a whole or a ratio between two quantities.

Mixed Numbers

Numbers consisting of an integer and a fraction, representing quantities greater than one.

Lowest Terms

Refers to a fraction simplified to its smallest possible numerator and denominator without changing its value.