Which One of These Statements Related to Depreciation Is Correct

question 10

Multiple Choice

Which one of these statements related to depreciation is correct for a firm with taxable income of $121,600 and after-tax income of $74,200?

• A)Depreciation increases the net book value of the firm's assets.
• B)Depreciation is a noncash expense that increases the firm's cash flows.
• C)Depreciation lowers the firm's net income but does not affect its cash flows.
• D)Depreciation has no effect on either the firm's net income or its cash flows.
• E)Depreciation decreases both the firm's net income and its cash flows.