If General Electric Finds That When It Doubles Both Its

question 16

Multiple Choice

If General Electric finds that when it doubles both its plant size and the amount of associated inputs, its output level does not double, then

• A) the law of diminishing returns is in effect.
• B) long-run average costs must be decreasing.
• C) the firm is experiencing diseconomies of scale.
• D) the firm should increase production.
• E) the firm is experiencing constant returns to scale.

Evaluate financial statement disclosures regarding income taxes to glean insights into transactions impacting deferred income taxes.

Understand the implications of net operating losses on tax reporting and planning.

Recognize the potential for managerial manipulation of net income through deferred income tax accounting.

Assess earnings quality through changes in deferred tax accounts.

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Definitions:

Part Performance

An equitable doctrine allowing a court to enforce an oral contract, despite statutory requirements for it to be in writing, based on actions taken in reliance on the contract.

Land

The surface of the earth, extending downward to the center and upward indefinitely into the airspace, including natural resources and physical features.

Acceptable

Deemed satisfactory or permissible by a given standard or authority.

Acreage

The measurement of land area in acres, often used in real estate and land management.