Which of the following statements is false regarding cash flows and accounting earnings (net income)?
A. Accounting earnings and cash flow are not the same.
B. If a firm buys a fixed asset for $1 million at the beginning of a project (Year 0) and uses MACRS, the $1 million cost will be spread across multiple years via depreciation when computing the yearly accounting earnings (net income) of the project.
C. If a firm buys a fixed asset for $1 million at the beginning of a project (Year 0), the entire $1 million will be treated as an outflow of cash when computing the Year 0 cash flow.
D. Managers should use a project's expected earnings instead of expected cash flows when computing the project's net present value.