Which of the Following Statements Is NOT True Concerning the Determination

question 35

Multiple Choice

Which of the following statements is NOT true concerning the determination of the effective tax rate to be used for interim reporting?

• A) Tax rate changes should not be accounted for retroactively.
• B) The effective tax rate for the entire year should be estimated.
• C) The effective tax rate should reflect anticipated tax credits.
• D) The estimated tax rate should reflect extraordinary items.

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Definitions:

Explicit Costs

Direct, out-of-pocket payments made by firms for the use of inputs and resources in the production process.

Implicit Costs

Costs that represent the opportunity cost of using resources owned by the firm for its own production instead of earning income elsewhere.

Accounting Profit

The net income reported on the financial statements, calculated as total revenues minus explicit costs.

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.