Which of the Following Statements Is False

question 248

Multiple Choice

Which of the following statements is false?

• A) While marginal and average tax rates often differ, it is the average tax rate that is relevant
• for most financial decisions.
• B) The book value of an asset on the statement of financial position can be very different
• from its market value.
• C) Net income as calculated from the statement of comprehensive income is not the net cash
• flow of the firm.
• D) Non-cash items are expenses charged against revenues that do not directly affect cash
• flow.
• E) The cash flow identity states that all net cash flows earned by the firm are distributed in
• whole to its creditors and shareholders.

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Definitions:

Total Utility

The complete fulfillment experienced from the consumption of a specific amount of products or services.

Marginal Utility

The increased happiness or value a buyer experiences by consuming an extra unit of a good or service.

Diminishing Marginal Utility

The principle that as an individual consumes more of a good, the utility (satisfaction or benefit) gained from each additional unit decreases.

Total Utility

The overall satisfaction or value a consumer receives from consuming a particular quantity of a good or service.