Which of the following statements is FALSE?
A)Depreciation is a method used for accounting and tax purposes to allocate the original purchase cost of the asset over its life.
B)Sometimes the firm explicitly forecasts free cash flow over a shorter horizon than the full horizon of the project or investment.
C)Earnings include the cost of capital investments,but do not include non-cash charges,such as depreciation.
D)Firms often report different depreciation expenses for accounting and for tax purposes.

Question

Quizplus · Accepted Answer

Earnings do include non-cash charges, such as depreciation. This is because depreciation is a non-cash expense that reduces the book value of an asset over time. Therefore, it is deducted from revenue to calculate earnings.

Which of the Following Statements Is FALSE