Generally accepted accounting principles are ambiguous in the determination of a firm's net income because:
A)it does not reflect actual cash inflows and outflows of the firm
B)stock dividends are difficult to forecast
C)depreciation is a cash outlay but is not reflected as such
D)tax laws change regularly which cause the firm to misjudge its true tax obligation

Question

Quizplus · Accepted Answer

GAAP focuses on accrual accounting, which records revenues and expenses when they are incurred, not when cash is exchanged, leading to differences between net income and actual cash flows.

Generally Accepted Accounting Principles Are Ambiguous in the Determination of a Firm's