Profit for the year differs from net cash from operations because of all the following except:
A) Non-cash expenses such as depreciation.
B) Timing differences between recognizing revenue and expenses and their cash flows.
C) Gains and losses included in profit for the year but classified as investing or financings activities.
D) All of the above will cause a difference between profit for the year and cash flows.

Question

Quizplus · Accepted Answer

All of the options mentioned (A, B, and C) can cause a difference between profit for the year and cash flows, so the correct answer is D. Non-cash expenses such as depreciation will reduce profit for the year, but there is no actual cash transaction involved. Timing differences between recognizing revenue and expenses and their cash flows mean that revenue or expenses might be recorded in a different period from when the actual cash transaction occurs. Gains and losses included in profit for the year but classified as investing or financing activities can also affect the profit for the year without directly impacting cash flows.

Profit for the Year Differs from Net Cash from Operations