Accounting figures and cash flows are not necessarily the same due to the presence of certain non-cash expenditures on a firm's income statement.

Question

Quizplus · Accepted Answer

Non-cash expenditures such as depreciation, amortization, and stock-based compensation are recorded as expenses on the income statement but do not affect a company's cash flows, resulting in a difference between accounting figures and cash flows.

Accounting Figures and Cash Flows Are Not Necessarily the Same