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Which of the following statements is true? Three fundamental issues separate net income and cash flow: accrual-based accounting, noncash expense items, and interest expense The
Which of the following statements is true? Three fundamental issues separate net income and cash flow: accrual-based accounting, noncash expense items, and interest expense The finance manager uses the framework of the income statement to find the operating income of the company (an accounting measure), which is also the true cash flow from operations. In accrual-based accounting, revenue is recorded at the time of sale if the revenue has been received in cash. Generally accepted accounting principles (GAAP) in the United States do not allow the use of accrual-based accounting to record revenue QUESTION 7 Which of the statements below is FALSE? Cash flow to owners shows cash paid to owners plus any new borrowing from owners. The cash that the firm generates from its operating decisions (use of its assets) is used to either pay creditors or the owners of the company Cash flow to creditors shows a portion of how the firm is financing the operations. Cash flow from assets shows the success or failure of the operating decisions
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