Divergence between net income and cash flow may be due to any of the following except
A)use of the direct method of presenting cash flows from operations.
B)the company being brand new.
C)fraudulent financial reporting.
D)seasonal variations in a company's operations.

Question

Quizplus · Accepted Answer

The use of the direct method of presenting cash flows from operations can actually help reduce divergence between net income and cash flow, as it provides a more detailed breakdown of cash inflows and outflows. The other options (being a brand new company, fraudulent financial reporting, and seasonal variations) can all contribute to divergence between net income and cash flow.

Divergence Between Net Income and Cash Flow May Be Due