Which of the Following Questions Is FALSE

question 7

Multiple Choice

Which of the following questions is FALSE?

• A)Net Working Capital = Current Assets - Current Liabilities.
• B)Because depreciation is not a cash flow,we do not include it in the cash flow forecast.
• C)Tax loss carrybacks allow corporations to take losses during the current year and use them to offset income in future years.
• D)Earnings are an accounting measure of firm performance.

---

Definitions:

Selling Expenses

Expenses that are incurred directly in the selling of merchandise.

Administrative Expenses

Costs related to the general operation of a business, such as salaries of non-sales personnel, rent, office supplies, and utilities.

Variable Cost Method

A cost-plus method of pricing setting in which only the variable costs are included in the cost amount to which the markup is added.

Fixed Manufacturing Costs

Expenses that do not change with the level of production, such as rent, salaries of permanent employees, and depreciation of factory equipment.