A Firm's Cash Flows Will Differ from Net Income Each

question 59

Multiple Choice

A firm's cash flows will differ from net income each period for all of the following reasons except:

• A) cash receipts from customers do not necessarily occur in the same period in which a firm recognizes revenues.
• B) cash expenditures to employees, suppliers, and governments do not necessarily occur in the same period in which a firm recognizes expenses.
• C) the company is sustaining losses each period.
• D) cash inflows and outflows that pertain to investing and financing activities do not immediately flow through the income statement.

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Definitions:

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or stock.

Exchange Rate

The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for another.

Shipping Charge

A fee imposed by a carrier for the handling and transportation of goods from one location to another.

U.S. Dollars

The official currency of the United States, used as a standard unit of money and backed by the federal government.