Which of the Following Statements Is CORRECT

question 69

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:

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