Which of the Following Statements Is CORRECT

question 53

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 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 cash flow.
• D)Operating income is derived from the firm's regular core business. Operating income is calculated as Revenues less Operating costs. Operating costs do not include interest or taxes.
• E)Depreciation is not a cash charge, so it does not have an effect on a firm's reported profits.

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Definitions:

Routine Request

A standard or common request made in a professional or organizational context, often following established procedures.

Middle Paragraph

The central section of a piece of writing, typically providing supporting information or arguments.

Time Frames

Specific periods during which certain actions are to be completed or conditions are to exist.

Buffer Sentence

A neutral or positive opening sentence in a message that prepares the reader for the following information, which might be negative or controversial.