The use of the straight-line method of computing depreciation increases a company's tax liability, thereby increasing the company's cash flow.

Question

Quizplus · Accepted Answer

The straight-line method of depreciation results in a lower tax liability compared to methods such as accelerated depreciation, which means that the company's cash flow is increased as it will have to pay less in taxes.

The Use of the Straight-Line Method of Computing Depreciation Increases