Depreciation is a noncash expense recorded on the income statement, reflecting the allocation of the cost of tangible assets over their useful lives. It does not directly affect cash flow but reduces taxable income.

Solved

Depreciation

Question 358

Multiple Choice

Depreciation:

A) Is a noncash expense that is recorded on the statement of comprehensive income.
B) Increases the net fixed assets as shown on the statement of financial position.
C) Reduces both the net fixed assets and the costs of a firm.
D) Is a non-cash expense which increases the net operating income.
E) Decreases net fixed assets, net income, and operating cash flows.

Correct Answer: