Question

Which of the following statements is false?

(a) A negative cash flow can occur in a year in which net income is positive.
(b) An increase in accounts receivable represents accounts not yet collected in cash.
(c) An increase in accounts payable represents accounts not yet collected in cash.
(d) To obtain cash flow from operations, the reported net income must be adjusted.

Answer 1

The false statement among the given options is that an increase in accounts payable represents accounts not yet collected in cash.

Step-by-step explanation:

The false statement among the given options is (c) An increase in accounts payable represents accounts not yet collected in cash.

Accounts payable represents the amount a company owes to its creditors or suppliers for goods or services received on credit. An increase in accounts payable indicates that the company has received goods or services but has not yet made the payment in cash. So, an increase in accounts payable does not represent accounts not yet collected in cash.