Which of the following is/are false?
A)Firms do not necessarily recognize revenues when they receive cash
B)Firms do not necessarily recognize expenses when they disburse cash.
C)Net income will not necessarily equal cash flow from operations each period.
D)A profitable firm will likely borrow funds in order to remain in business, but eventually operations must generate cash to repay the borrowing.
E)None of the above are false

Question

Quizplus · Accepted Answer

All of the statements are true. Firms may recognize revenues and expenses on an accrual basis rather than on a cash basis, resulting in differences between cash flow and revenue or expenses recognized. Net income and cash flow from operations can differ due to non-cash items or changes in working capital. A profitable firm may borrow funds for investment or growth, but ultimately must generate cash from operations to repay debt.

Which of the Following Is/are False