Which of the following statements is CORRECT a The more depreciation a

Question

Which of the following statements is CORRECT?

a. The more depreciation a firm reports, the higher its tax bill, other things held constant.

b. Because a firms cash flow is shown as the lowest entry on the income statement, people often call it "the bottom line.

c. Depreciation reduces a firms cash balance, so an increase in depreciation would normally lead to a reduction in the firms cash flow.

d. Operating income is derived from the firm's regular core business. Operating income is calculated as Revenues less Operating costs. Operating costs do not include interest or taxes.

e. Depreciation is not a cash charge, so it does not have an effect on a firms reported profits.

Answer

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