Assume That a Company Currently Depreciates Its Fixed Assets Over

question 33

Multiple Choice

Assume that a company currently depreciates its fixed assets over 7 years. Which of the following would occur if a tax law change forced the company to depreciate its fixed assets over 10 years instead?

• A) The company's tax payment would increase.
• B) The company's cash position would increase.
• C) The company's net income would increase.
• D) Answers a and c are correct.
• E) Answers b and c are correct.

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Definitions:

Interest Charged

The amount of money charged by a lender to a borrower for the use of borrowed funds, expressed as a percentage of the principal.

Investment Matured

An investment matured refers to when an investment reaches its due date and the principal amount is returned to the investor along with any final interest payments.

Interest Amount

The sum paid or charged for the use of money or for borrowing money.

Interest Earned

Interest Earned is the amount of interest received over a period on deposits or investments.