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.

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Definitions:

Accounts Receivable Balance

The total amount of money owed to a company by its customers for goods or services delivered but not yet paid for.

Cash Sales

Transactions where payment is made in cash at the time of purchase, without the use of credit.

Budget Manual

A comprehensive guide that outlines the procedures, policies, and responsibilities associated with the budgeting process in an organization.

Budget Procedures

The set of processes and guidelines a business or organization follows to create, implement, and monitor its budget.