[amp_mcq option1=”is unavoidable cost” option2=”is a cash flow” option3=”reduces tax liability” option4=”involves an outflow” correct=”option3″]<\/p>\n
The correct answer is: C. reduces tax liability<\/strong>.<\/p>\n Depreciation is a non-cash expense that reduces a company’s taxable income. This means that companies can deduct depreciation expense from their taxable income, which can lower their tax liability.<\/p>\n Option A is incorrect because depreciation is not an unavoidable cost. Companies can choose to depreciate their assets over a shorter or longer period of time, which will affect the amount of depreciation expense they record each year.<\/p>\n Option B is incorrect because depreciation is not a cash flow. Cash flows are the actual movement of money into and out of a company. Depreciation is an accounting entry that reduces the value of an asset over time, but it does not involve any actual cash flow.<\/p>\n Option D is incorrect because depreciation does not involve an outflow of cash. As mentioned above, depreciation is an accounting entry that reduces the value of an asset over time. It does not involve any actual cash flow.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”is unavoidable cost” option2=”is a cash flow” option3=”reduces tax liability” option4=”involves an outflow” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-44246","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n