Which one of the following best explains the combination of a high level of net income combined with a low level of cash flow during an accounting period?
A) High depreciation expense
B) Reduction of inventory levels
C) Acquisition of equipment
D)Increase in accounts payable

Question

Quizplus · Accepted Answer

The acquisition of equipment can lead to a high level of net income combined with a low level of cash flow because while the purchase of equipment requires a significant cash outlay, it does not immediately affect net income significantly due to depreciation being spread over the useful life of the equipment.

Which One of the Following Best Explains the Combination of a High