In the Statement of Cash Flows, Depreciation and Amortization Expense

question 14

Multiple Choice

In the statement of cash flows, depreciation and amortization expense is added back to net income because:

• A)these expenses do not affect cash, but were subtracted in the determination of net income.
• B)these expenses affect investing activities, not operating activities.
• C)the cash disbursements for these accrued expenses will be made in a future period.
• D)these expenses are recognized for accounting purposes, but they do not represent economic costs.

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Definitions:

Highly Standardized

Describes processes, products, or services that are uniform in quality and performance, often due to strict regulations or guidelines.

Health Drink Manufacturer

A company specializing in the production of beverages that are marketed for their health benefits.

Global Integration

The process of international interconnection through the exchange of goods, services, information, and culture.

Homogeneity of Tastes

A market condition where consumers have similar preferences or desires for products and services.