Net income differs from net cash flows from operations because of all the following except:
A)Non-cash expenses such as depreciation.
B)Timing differences between recognizing revenue and expenses and their cash flows.
C)Gains and losses included in net income but classified as investing or financing activities.
D)Cash received in exchange for goods sold in the normal course of operations.

Question

Quizplus · Accepted Answer

Net income includes non-cash expenses (A), timing differences (B), and gains/losses (C) that may not involve actual cash transactions. Therefore, the only option that does not result in a difference between net income and net cash flows from operations is choice D, which involves cash received in exchange for goods sold during operations.

Net Income Differs from Net Cash Flows from Operations Because