Which of the following statements are correct?
I. A company's choice of accounting principles for financial reporting purposes does not affect net cash flow for the accounting period
II. A company's choice of accounting principles for financial reporting purposes does not affect operating cash flow
III. If a company sells its receivables this will increase operating cash flow
IV. If a company sells its receivables this will increase financing cash flow
A) I and III
B) I, II and III
C) II and IV
D) I and IV

Question

Quizplus · Accepted Answer

A company's choice of accounting principles affects reported earnings but not the actual cash flow. Selling receivables increases operating cash flow as it converts receivables into cash.

Which of the Following Statements Are Correct