As seen on an income statement:
A)interest is deducted from income and increases the total taxes incurred.
B)depreciation reduces both the pretax income and the net income.
C)depreciation is shown as an expense but does not affect the taxes payable.
D)the tax rate is applied to the earnings before interest and taxes when the firm has both depreciation and interest expenses.
E)interest expense is added to earnings before interest and taxes to get pretax income.

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that reduces both pretax income and net income, as it is deducted before calculating taxes.

As Seen on an Income Statement