Which of the Following Would Cause Net Income to Be

question 17

Multiple Choice

Which of the following would cause net income to be higher than cash flow from operations?

• A)Store staff worked the last week of the year until December 31, but will not be paid until January 15.
• B)The company amortizes intangible assets over their useful lives.
• C)The company made sales to customers on credit that will be paid in the next fiscal period.
• D)The company purchased new display shelves for the store.

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Definitions:

Depreciation Estimates

Projections made about the reduction in value of a tangible asset over its useful life for accounting and tax purposes.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the consumption of the asset's value over time.

Depreciation Estimates

Projections or calculations made regarding the decrease in value of tangible assets over time due to use, wear, or obsolescence.

Depreciation Method

A systematic approach to allocating the cost of a tangible asset over its useful life.