Why Is Depreciation Added to Net Income to Determine Cash

question 31

Multiple Choice

Why is depreciation added to net income to determine cash flow from operations?

• A) To compensate for financial risk.
• B) Depreciation is an expense but not a cash outflow.
• C) It is standard procedure when capital budgeting for a multinational corporation.
• D) Net income is understated due to excessive depreciation.

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Definitions:

Prejudice

A preconceived opinion or bias, often negative, towards individuals or groups based on their characteristics, such as race, gender, or religion, without factual justification.

Aggressive Behavior

Actions intended to cause harm or pain to others, ranging from verbal abuse to physical violence.

Fundamental Attribution Error

The tendency to overestimate the role of personal traits and underestimate the influence of situational factors when explaining other people's behavior.

Situational Causes

Factors external to an individual that can influence behavior and outcomes in specific contexts.