What is included in the cash flow statement and why does net income not equal cash flow?

• A. It includes only operating activities.
• B. It includes operating, investing, and financing activities; net income diverges due to non-cash items.
• C. It includes operating, investing, and financing activities; net income diverges due to non-cash items and timing differences.
• D. Net income always equals cash flow from operations.

Answer: (C)