Which of the Following Statements Is True

question 83

Multiple Choice

Which of the following statements is true?

• A) Depreciation is a noncash expense and reduces taxable income thereby reducing the cash outflow associated with tax payments.
• B) Depreciation's impact upon cash flows can be accounted for by adding depreciation back to net income before interest and after taxes.
• C) Depreciation's impact upon cash flows can be accounted for by adding the tax savings associated with the depreciation to net income before interest and after taxes.
• D) All of the above statements are true.
• E) Only (a)and (b)are true.

---

Definitions:

Inefficient

Lacking in effectiveness or productivity, resulting in wasted resources or effort without achieving the desired output.

Economies Of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operation increases, leading to a lower cost per unit.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

International Trade

The exchange of goods and services between countries.