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Describes the impact on the indirect operating cash flow

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Problem 1: Assume NO taxes. Assume that all activities of a company are classified as operating activities on the cash flow statement. A company had not inflated its income in prior periods. However, it fraudulently inflates its reported income in the current period by booking revenues early and delaying expenses. Which one of the following best describes the impact on the indirect operating cash flow statement in the current period?

a. Net income and operating cash flow would both increase by equal amounts. Reminder: There are no taxes.
b. Net income would increase but the operating cash flow would increase by a smaller amount. Reminder: There are no taxes.
c. Net income would increase but the operating cash flow would not increase. Reminder: There are no taxes.
d. None of the above.

Reference no: EM132976710

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