Many analysts focus attention on cash flow from operations, thinking it as important as, or more important than, net income.A common misconception is that the management has little opportunity to manipulate transactions affecting the statement of cash flows.The manipulation possibilities arise from
A)the amounts of cash flows.
B)the timing of cash flows.
C)the classification and disclosure in the statement and related notes.
D)both choices b and c.
E)none of the above.

Question

Quizplus · Accepted Answer

The manipulation possibilities in the statement of cash flows arise from both the timing of cash flows and the classification and disclosure in the statement and related notes. The amounts of cash flows are generally considered to be more objective and less subject to manipulation. Therefore, options B and C are correct, while option A is not.

Many Analysts Focus Attention on Cash Flow from Operations, Thinking