Which of the Following Is Not True About Net Operating

question 159

Multiple Choice

Which of the following is not true about net operating cash flow?

• A) It is the difference between cash receipts and cash disbursements from providing goods and services.
• B) It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows.
• C) Over short periods, it may not be indicative of long-run cash-generating ability.
• D) It is easy to understand and all information required to measure it is factual.

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Definitions:

Net Discount

The reduction in price after all discounts have been applied and before taxes are calculated.

Mark-up

Mark-up refers to the amount added to the cost price of goods to cover overhead and profit; it is a percentage of the cost price.

Camping Tents

Portable shelters made of cloth used for outdoor overnight stays, especially in wilderness areas.

Net Cost

The actual cost of a product or service after all discounts, rebates, or allowances have been applied.