Net capital spending is equal to the:
A)net change in total assets plus depreciation.
B)net change in fixed assets plus depreciation.
C)net income plus depreciation.
D)difference between the market and book values of the total assets.
E)change in total assets.

Question

Quizplus · Accepted Answer

Net capital spending is the net change in fixed assets plus depreciation. This represents the amount spent on fixed assets (capital expenditures) during the year, net of any asset sales, and accounts for the depreciation of existing fixed assets. Option A includes the net change in all assets, not just fixed assets, and option E only includes the change in total assets without accounting for the depreciation of existing fixed assets. Option C is the formula for calculating operating cash flows, not net capital spending. Option D is unrelated to net capital spending.

Net Capital Spending Is Equal to The