Which of the following are expenses for accounting purposes but are not operating cash flows for financial purposes?
I.interest expense
II.taxes
III.costs of goods sold
IV.depreciation
A)IV only
B)II and IV only
C)I and III only
D)I and IV only
E)I, II, and IV only

Question

Quizplus · Accepted Answer

Interest expense is an accounting expense but may not be a cash outflow because interest payments may include payments of interest expense from previous periods. Costs of goods sold are operating expenses, but they represent cash outflows for financial purposes. Taxes and depreciation are also expenses for accounting purposes, but taxes are not necessarily cash outflows, and depreciation is a non-cash expense. Therefore, options I and IV (interest expense and depreciation) are expenses for accounting purposes but not operating cash flows for financial purposes.

Which of the Following Are Expenses for Accounting Purposes but Are