What are Accounting Profits and Cash Flows and What should Increase by the Decisions made by Financial Managers?


1. Accounting profits and cash flows are:

a.    Generally the same since they reflect current laws and accounting standards.
b.    Generally the same since accounting profits reflect when cash flow is received.
c.    Generally not the same since GAAP allows for revenue recognition separate from the receipt of cash flows.
d.    Generally not the Same because cash inflows occur before revenue recognition,
e.    Both c and d.
2.   The decisions made by financial managers should all be ones which increase the:

a.    Size of the firm.
b.    Growth rate of the firm,
c.    Marketability of the managers.
d.    Market value of the existing owners' equity.
e.    Leverage of the firm.


These multiple choice questions belong to Finance. The first question is about accounting profits and cash flows and the second question is about the decisions taken by financial managers.


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