Pastello, a Bakery in New Jersey, Needs to Sell All

question 100

Multiple Choice

Pastello, a bakery in New Jersey, needs to sell all the goods in its inventory before they perish. The bakery owners, Mark and Julia, plan to use the cash received from selling the goods to open a new outlet of Pastello in a different locality. In this scenario, the goods stored in Pastello's inventory represent its _____.

• A) long-term liabilities
• B) current liabilities
• C) current assets
• D) defensive assets

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Definitions:

Incremental Cash Flow

The extra cash flow from operations that a company gets by starting a new project.

Tax Rate

This represents the percentage at which an individual or corporation is taxed by the government.

Straight-Line Depreciation

Straight-line depreciation is a method of allocating the cost of a tangible asset over its useful life in equal annual installments.

Tax Shield

A reduction in taxable income for individuals or corporations achieved through claiming allowable deductions.