Which One of These Is Correct

question 9

Multiple Choice

Which one of these is correct?

• A)Depreciation has no effect on taxes.
• B)Interest paid is a noncash item.
• C)Taxable income must be a positive value.
• D)Net income is distributed either to dividends or retained earnings.
• E)Taxable income equals net income × (1 + Average tax rate).

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Definitions:

Defined Benefit

A type of pension plan where the benefits that an employee will receive upon retirement are predefined based on factors like salary and tenure.

Pension Plan

A retirement plan that requires an employer to make contributions into a pool of funds set aside for an employee's future benefit.

Defined Benefit Plan

A pension plan that promises employees a fixed annual pension benefit at retirement, based on years of service and compensation levels.

Defined Contribution Plan

A retirement plan in which the employer, employee, or both make contributions on a regular basis, and the final benefits depend on the investment's performance.