Saucy Inc Reported a Taxable and Accounting Loss of $130,000 for for 2017

question 12

Multiple Choice

Saucy Inc. reported a taxable and accounting loss of $130,000 for 2017. Its pre-tax accounting income for the last two years was as follows: The amount that Saucy reports as a net loss for financial reporting purposes in 2017, assuming that it uses the carryback provisions, and that the tax rate is 25% for all years involved, is

• A)$0.
• B)$97,500.
• C)$105,000.
• D)$130,000.

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use, and where use by one individual does not reduce availability to others.

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual price they receive.

Below Equilibrium Price

A situation where the price of a good or service is set lower than the market equilibrium, often leading to a shortage.