Which of the following causes net income to differ from cash flow?

Question

Quizplus · Accepted Answer

All of the choices listed cause net income to differ from cash flow. Depreciation is a non-cash expense that reduces net income but does not affect cash flow. The purchase of inventory on credit affects cash flow when the payment is made, not at the time of purchase, thus differing from its impact on net income. Similarly, the sale of merchandise on credit increases net income when the sale is made, but cash flow only increases when the cash is received.

Which of the Following Causes Net Income to Differ from Cash