Which of the Following Statements Is CORRECT

question 36

Multiple Choice

Which of the following statements is CORRECT?

• A)The more depreciation a firm reports, the higher its tax bill, other things held constant.
• B)People sometimes talk about the firm's net cash flow, which is shown as the lowest entry on the income statement, hence it is often called "the bottom line."
• C)Depreciation reduces a firm's cash balance, so an increase in depreciation would normally lead to a reduction in the firm's net cash flow.
• D)Net cash flow (NCF) is often defined as follows: Net Cash Flow = Net Income + Depreciation and Amortization Charges.
• E)Depreciation and amortization are not cash charges, so neither of them has an effect on a firm's reported profits.

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Definitions:

Consumer Confidence

A measure of how optimistic or pessimistic consumers are about their financial situation and the overall state of the economy.

Social Stratification

A system by which a society ranks categories of people in a hierarchy, based on factors like wealth, income, race, education, and power.

Social Class

A division of a society based on social and economic status.

Social Strata

Layers within a society, formed based on various criteria such as wealth, occupation, and education, which define a person's social standing or class.