Which of the following would cause net income on the accrual basis to be different than (either higher or lower) ""cash provided by operating activities"" on the statement of cash flows?
A) Accrued interest earned on a certificate of deposit
B) Paid a cash dividend to the stockholders
C) Purchased a certificate of deposit for cash
D) Purchased land for cash

Question

Quizplus · Accepted Answer

Accrued interest earned on a certificate of deposit would increase net income on the accrual basis, but it would not result in an increase in cash provided by operating activities on the statement of cash flows until the interest is actually received in cash. The other options (B, C, and D) are all cash transactions and would therefore not cause a difference between net income on the accrual basis and cash provided by operating activities.

Which of the Following Would Cause Net Income on the Accrual