Which of the Following Statements Is CORRECT

question 43

Multiple Choice

Which of the following statements is CORRECT?

• A) Depreciation and amortization are not cash charges, so neither of them has an effect on a firm's reported profits.
• B) The more depreciation a firm reports, the higher its tax bill, other things held constant.
• C) People sometimes talk about the firm's net cash flow, which is shown as the lowest entry on the income statement, hence it is often called "the bottom line."
• D) Depreciation reduces a firm's cash balance, so an increase in depreciation would normally lead to a reduction in the firm's net cash flow.
• E) Net cash flow (NCF)is often defined as follows:
• Net Cash Flow = Net Income + Depreciation and Amortization Charges.

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Definitions:

Wise-Use Resource

A concept promoting the sustainable management and use of natural resources for economic and social benefits.

Henry David Thoreau

A 19th-century American essayist, poet, and philosopher, best known for his book "Walden," a reflection upon simple living in natural surroundings.

George Perkins Marsh

A 19th-century American diplomat and environmentalist considered one of the precursors to the modern environmental movement.