Generally, which of the following non-cash charges is/are added to earnings after tax to calculate the after-tax cash flow?
I. Depreciation
II. Deferred taxes
A) I only
B) II only
C) Both I and II
D) Neither I nor II

Question

Quizplus · Accepted Answer

Depreciation and deferred taxes are both non-cash charges that are added back to earnings after tax to calculate after-tax cash flow. Depreciation is added back because it represents the decline in the value of assets over time, but does not affect cash flow directly. Deferred taxes also reflect accounting adjustments that do not directly impact cash flow, and are therefore added back.

Generally, Which of the Following Non-Cash Charges Is/are Added to Earnings