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<p>(<strong>a) Is unavoidable cost,</strong></p> <p><strong>(b) Is a cash flow,</strong></p> <p><strong>(c) Reduces Tax liability,</strong></p> <p><strong>(d) Involves an outflow.</strong></p> <p> </p>
Non of the answer is correct, as depreciation is incorporated in cash flows because it is a non cash item reported in operating income.
So it is added back to operating income to arrive at operating cash flows
Because it reduces tax liability (in financial terms, that effect is called a "tax shield")
Answer option (c) >>>>>>>>>> Reduces Tax liability
a)
Depreciation is a not an outflow cost. So in order to counteract its impact (when calculated the profit & loss account), it should be deducted in Cash flow Statement
it is unavoidable cost..
I think the answer is A is unavoidable cost.
In the operating activities section of the cash flow statement, add back expenses that did not require the use of cash. Examples are depreciation, depletion, and amortization expense.
(c) Reduces Tax liability,
It one of Tax Shield items
reduces tax liability
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