Which of these causes a difference between the profit in the income statement and the net cash increase in the statement of cash flows?
A) Depreciation.
B) Prepaid insurance.
C) Credit purchases not yet paid.
D) All of the above.

Question

Quizplus · Accepted Answer

All the options listed affect the difference between the profit reported in the income statement and the net cash increase in the statement of cash flows. Depreciation is a non-cash expense that reduces profit but does not affect cash flow. Prepaid insurance is an expense recorded when paid, affecting cash flow but not the income statement until it's expensed over time. Credit purchases not yet paid affect cash flow when the payment is made, not when the purchase is recorded as an expense.

Which of These Causes a Difference Between the Profit in the Income