Which of the following is NOT a reason why cash flow may not equal net income?
A)Amortization is added in when calculating income.
B)Changes in inventory will change cash flows but not income.
C)Capital expenditures are not recorded on the income statement.
D)Depreciation is deducted when calculating net income.

Question

Quizplus · Accepted Answer

Amortization is typically already included in the calculation of net income, so it would not be a reason why cash flow may not equal net income. Instead, the reasons are typically related to non-cash expenses or changes in working capital accounts such as inventory, accounts receivable, and accounts payable. Option B and C are correct reasons, while D is an example of depreciation, which is a non-cash expense that reduces net income but does not affect cash flow.

Which of the Following Is NOT a Reason Why Cash