Which one of the following decreases net income but does not affect the operating cash flow of a firm which owes no taxes for the current year?

Question

Quizplus · Accepted Answer

Noncash items, such as depreciation or amortization expenses, do not require an actual outlay of cash, and therefore do not impact operating cash flow. However, they do decrease net income because they represent an expense for the company. If the firm owes no taxes for the current year (perhaps due to carrying forward losses from previous years), then the decrease in net income from the noncash item will not result in any tax savings, further supporting the notion that operating cash flow is unaffected.

Which One of the Following Decreases Net Income but Does