Which of the Following Statements Is True

question 74

Multiple Choice

Which of the following statements is true?

• A)There is no relationship between the federal deficit and the federal debt.
• B)A federal deficit adds to the federal debt.
• C)The change in the federal deficit each year equals the federal debt.
• D)The federal debt is the same as the federal deficit.
• E)The federal debt grew in the period when there was a federal budget surplus.

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Definitions:

Indirect Method

A method used in cash flow statements to convert net income into net cash flow from operating activities by adjusting for non-cash transactions and changes in working capital.

Depreciation Expense

The allocated portion of the cost of a fixed asset, written off as an expense over its useful life to reflect its wear and tear or obsolescence.

Amortization Expense

The periodic allocation of the cost of an intangible asset over its useful life.

Operating Activities

Operating Activities refer to the primary revenue-generating activities of a company, such as sales and service provision, and their related expenditures.