If You Start with Incremental Net Operating Profits After Tax

question 69

True/False

If you start with incremental net operating profits after tax (NOPAT) and add depreciation and amortization to it, then you will obtain incremental cash flow from operations.

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Definitions:

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditure to the correct accounting periods, ensuring the financial statements are in accordance with the accrual basis of accounting.

Annual Accounting Period

A 12-month timeframe over which a company measures its financial performance and prepares financial statements.

Chart of Accounts

A structured list of all the financial accounts in the general ledger of a company, organizing financial transactions during an accounting period.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditure to the correct period.