Which One of These Statements Related to Depreciation Is Correct

question 72

Multiple Choice

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

• A)Depreciation increases the net book value of the firm's assets.
• B)Depreciation in a non-cash 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.

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Definitions:

Proximately Caused

The action that directly leads to a specific effect or outcome, establishing a clear causal link in legal responsibility.

ATM

An Automated Teller Machine that allows bank customers to perform financial transactions, such as withdrawals and deposits, electronically without a human teller.

Payor Bank

The bank that is responsible for paying the check or draft as specified by the person making the payment.

Midnight Deadline

The end point, usually referred to the close of business, or 11:59 PM, by which a particular task or obligation must be completed.