If the cash method of accounting is used rather than the accrual method, which of the following adjustments must be made to Net Income to arrive at after-tax cash flows?

Question

Quizplus · Accepted Answer

Under the cash method of accounting, income and expenses are recognized when cash is received or paid. Therefore, adjustments related to accounts payable, accounts receivable, and expense liabilities are not necessary. Depreciation is a non-cash expense and does not affect cash flows directly.

If the Cash Method of Accounting Is Used Rather Than