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:

Troubled Debt Restructuring

A process where terms of a debt are modified due to financial difficulties of the borrower, often involving concessions by the lender.

Continuation

The process of extending or carrying on an activity without interruption.

Undiscounted Sum

The total of all future cash flows associated with an investment or project without adjusting them for their present value.

Discounted

The method of calculating the current value of a future sum of money or series of cash flows using a particular return rate.