Which One of the Following Statements Related to an Income

question 18

Multiple Choice

Which one of the following statements related to an income statement is correct?

• A) Interest expense increases the amount of tax due.
• B) Depreciation does not affect taxes since it is a non-cash expense.
• C) Net income is distributed to dividends and paid-in surplus.
• D) Taxes reduce both net income and operating cash flow.
• E) Interest expense is included in operating cash flow.

---

Definitions:

Fundamental Attribution Error

The inclination to attribute the actions of others more to their character traits than to the external situations influencing them, downplaying the impact of contextual circumstances.

Situational Constraints

External factors that restrict or dictate an individual's behavior, reducing freedom of action.

Underestimating

The act of judging something to be smaller or less important than it actually is, often leading to miscalculation or oversight.

Cognitive Dissonance

The mental discomfort experienced when holding two or more conflicting beliefs, values, or attitudes.