Which One of the Following Statements Related to an Income

question 18

Multiple Choice

Which one of the following statements related to an income statement is correct?

• A) Interest expense increases the amount of tax due.
• B) Depreciation does not affect taxes since it is a non-cash expense.
• C) Net income is distributed to dividends and paid-in surplus.
• D) Taxes reduce both net income and operating cash flow.
• E) Interest expense is included in operating cash flow.

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Definitions:

Non-controlling Interest

A stake in a company that is less than 50%, implying that the holder does not have control over the company's operations.

Equity

The value of an ownership interest in a company, calculated as company assets minus its liabilities and representing the net assets owned by shareholders.

Acquisition Date

The exact date on which control of a business is obtained by the acquirer, upon which the acquirer applies acquisition accounting.

Non-controlling Interest

The portion of equity interest in a subsidiary not attributable to the parent company.