Net cash flows typically equal accounting income.

Question

Quizplus · Accepted Answer

Net cash flows and accounting income are two separate concepts. While accounting income is the profit or loss reported on a company's income statement, net cash flows refer to the actual cash inflows and outflows during a period. These two figures can differ significantly, as accounting income includes non-cash items such as depreciation and changes in assets and liabilities, while net cash flows focus solely on cash transactions.

Net Cash Flows Typically Equal Accounting Income