The income statement shows the difference between a firm's income and its costs-i.e.,its profits-during a specified period of time.However,not all reported income comes in the form or cash,and reported costs likewise may not correctly reflect cash outlays.Therefore,there may be a substantial difference between a firm's reported profits and its actual cash flow for the same period.

Question

Quizplus · Accepted Answer

The statement is true, as not all reported income and costs are necessarily in the form of cash, leading to a potential difference between reported profits and actual cash flow.

The Income Statement Shows the Difference Between a Firm's Income