Rarely would the cash flows from operating activities, as reported on the statement of cash flows, be the same as the net income reported on the income statement.

Question

Quizplus · Accepted Answer

The net income reported on the income statement includes non-cash items such as depreciation and amortization expenses, which are added back to calculate operating cash flows on the statement of cash flows. Additionally, changes in working capital accounts (such as accounts receivable, accounts payable, and inventory) can also affect cash flows from operations, and these changes are not reflected in net income. Therefore, it is rare for cash flows from operating activities to be the same as net income.

Rarely Would the Cash Flows from Operating Activities, as Reported