Which of the following statements is correct?
A) Capital Cost Allowance (CCA) is a cash expense that is paid by the firm.
B) Capital Cost Allowance (CCA) is used for calculating total operating cost.
C) Capital Cost Allowance (CCA) is used to calculate financial cost that paid for capital budget.
D) Capital Cost Allowance (CCA) is a cash expense that should be allocated for tax purposes.

Question

Quizplus · Accepted Answer

Capital Cost Allowance (CCA) is a non-cash expense that is used for tax purposes to allocate the cost of capital assets over their expected useful life. It should be allocated for tax purposes but does not require a cash outflow. Therefore, option A, B, and C are incorrect.

Which of the Following Statements Is Correct