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it increases the gross profit
it decreases the gross profit
it increases the tax bill
it decreases the tax bill
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- is less Tax on Profit on Sale of Asset and less Operating Costs (revenue and expenses) or (other cash flows)?Depreciation is incorporated in cash flows because it: A. Is unavoidable cost B. Is a cash flow C. Involves an outflow D. Reduces tax liabilityPlease double-check that this is the correct answer. Thank you.
- Why is the depreciation tax shield a component of analyzing investment decisions? O A. Depreciation causes a cash outflow that is added to determine net income. O B. Though no cash was paid out, depreciation was included on the tax return, which caused the company to pay taxes on the amount of depreciation. O C. Depreciation lowers cash outflows for income taxes paid. O D. Depreciation creates cash flows that do not appear on the income statement.Select all that are true with respect to depreciation. Group of answer choices Depreciation is a cash flow outflow at the time it is recorded in the financial statements Depreciation itself is not a cash flow Accounting depreciation impacts cash flow, Tax depreciation does not Accounting depreciation does not impact cash flow, Tax depreciation does impact cash flow The depreciation tax shield is a relevant cash flow for decision makingTo get a project's after-tax cash flow, you must subtract depreciation as though it is an expense from the taxable income and then add it back again as though it is a positive cash flow to get the final net cash flow.a. Trueb. False
- o derive the top-down approach for calculating operating cash flow, we cancel the Blank______ expense where possible. Multiple choice question. interest depreciation sales taxThe disadvantage of actual cash value coverage of personal property compared to replacement cost coverage is that it A) will reimburse you for replacement cost minus estimated depreciation. B) will reimburse you for the cash value of a new item. C) must be reported as a loss on your tax return. D) does not have to be reported as a loss on your tax return. E) none of the aboveThe modified internal rate of return (MRR) test is designed to address a limitation associated withthe use of the internal rate of return (IRR). What is that limitation?a) Working capital requirementb) Income taxesc) Reinvestment rated) Depreciation expense
- What is depreciation and amortization? What's the difference? It is an accounting concept that has an indirect impact on cash flow as it is deductible for tax purposes and lowers the overall amount of taxes paid for that period. Therefore, it does impact or lower cash outflows for taxes. That is called the tax shield of depreciation and amortization. Over the course of my career, companies have increased their percentage of intangible property that must be amortized. Now, it is very common where companies will have little property, plant and equipment, but lots of intangible property. Why?Which of the following is a disadvantage of the average rate of return method? a. fails to consider the time value of money b. includes the amount of income earned over the entire life of the proposal c. emphasizes accounting income d. difficult to useWhen a depreciable asset is sold, with no proceeds (i.e., sold for zero), then it can be ignored for decision making because there is by definition no impact on cash flow. Group of answer choices True False