Under the Indirect Method,depreciation Expense Is Added to Net Income

question 42

True/False

Under the indirect method,depreciation expense is added to net income because it decreases net income but does not affect cash flow.

---

Definitions:

Arthur Laffer

An economist known for the Laffer Curve, which postulates a relationship between tax rates and tax revenue, suggesting there exists an optimal tax rate for maximizing revenue.

Tax Rates

The fraction of earnings on which a person or corporate entity must pay taxes.

Tax Revenue

The funds that governments garner from taxing activities.

Deadweight Loss

An economic inefficiency that occurs when the market outcome does not maximize total benefits, often due to distortions such as taxes, subsidies, or monopolies.