Which of the following statements concerning net income versus cash flow is most correct?
a. Net income is a rough measure of a business's cash flow.
b. Net income can be converted into a rough measure of cash flow by adding noncash expenses, typically depreciation.
c. Net income can be converted into a rough measure of cash flow by adding nonoperating income.
d. Net income can be converted into a rough measure of cash flow by adding the provision for bad debts.
e. None of the above statements are correct.
Ans: b. Net income can be converted into a rough measure of cash flow by adding noncash expenses, typically depreciation.
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