In the Statement of Cash Flows, Depreciation and Amortization Expense

question 14

Multiple Choice

In the statement of cash flows, depreciation and amortization expense is added back to net income because:

• A)these expenses do not affect cash, but were subtracted in the determination of net income.
• B)these expenses affect investing activities, not operating activities.
• C)the cash disbursements for these accrued expenses will be made in a future period.
• D)these expenses are recognized for accounting purposes, but they do not represent economic costs.

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Definitions:

Judgment

A legal decision made by a court following a lawsuit.

Appeals

The process of seeking a higher court's review of a lower court's decision in hopes of overturning or modifying the decision.

Garnishment

A legal process used by a creditor to collect a debt by seizing property of the debtor (such as wages) that is being held by a third party (such as the debtor’s employer).

Domesticated

In legal terms, this involves the process by which a foreign judgment or legal decision is recognized and can be enforced within the jurisdiction of another country or state.