Which of the Following Statements Is True

question 88

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.