Suppose a Firm Buys $3000 Worth of Inputs from Other

question 69

Multiple Choice

Suppose a firm buys $3000 worth of inputs from other firms,hires $2000 worth of labour services,and has sales revenue of $7500.The firm's resulting profit is $2500.If the GST (a value- added tax) rate is 5%,this firm will pay in GST.

• A)$2500
• B)$0
• C)$225
• D)$375
• E)$125

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Definitions:

Annual Impairment Test

A review conducted yearly to determine if an asset's carrying value exceeds its recoverable amount, leading to an adjustment if necessary.

Tax-loss Carryforwards

A provision in the tax code that allows an individual or company to use losses from one year to offset future profits for tax purposes.

External Growth

Expansion of a company's operations through acquisitions, mergers, or partnerships, rather than through organic growth.

Avoid Paying Dividends

Strategies employed by companies to retain earnings instead of distributing them to shareholders as dividends, often to reinvest in the business or improve balance sheet health.