question archive Which of the following is not true about net operating cash flow? Select one: a
Which of the following is not true about net operating cash flow? Select one: a
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Which of the following is not true about net operating cash flow?
Select one:
a. It is the difference between cash receipts and cash disbursements from providing goods and services.
b. Over short periods of time, it may not be indicative of long-run cash-generating ability.
c. It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows.
d. It is easy to understand and all information required to measure it is factual.
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Answer is option (c). Net operating cash flow is a measure of cash generated by a company in the normal business course.
Whereas, accrual basis of accounting does not consider cash inflow or outflow. It recognises a transaction when it occurs. So, Net operating cash flow cannot be a measure used in accrual accounting.
