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:

T-distribution

A type of probability distribution that is symmetric and bell-shaped, but with heavier tails, used especially in scenarios with smaller sample sizes.

Degrees of Freedom

The number of independent pieces of information available to estimate another piece of information or parameters in a dataset.

Student T-distributed

A probability distribution used in statistical analyses when the sample size is small and the population standard deviation is unknown.

Test Statistic

A calculated value from sample data used to decide whether to reject the null hypothesis in the context of a hypothesis test.