Accounting profits include non-cash revenues (e.g., prepaid rent) and non-cash expenses (e.g., depreciation) whereas cash flows do not include these items.

Name: Accounting profits include non-cash revenues (e.g., prepaid rent) and non-cash expenses (e.g., depreciation) whereas cash flows do not include these items.
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Question

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Accounting profits are calculated using accrual accounting, which includes non-cash revenues and expenses, while cash flows focus only on actual cash transactions.

Accounting Profits Include Non-Cash Revenues (E