Explain the Direct and Indirect Effects of a Change in Accounting

question 87

Essay

Explain the direct and indirect effects of a change in accounting principles.

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Definitions:

Marginal Tax Rate

Marginal Tax Rate is the rate at which the last dollar of income is taxed, reflecting the percentage of tax applied to your next dollar of income.

Cash Flow Estimate

An assessment of the amount of money expected to flow in and out of a business over a specific period.

Marginally Profitable

Describes a business or investment that generates a slight profit above its break-even point.

Capital Gain

The profit earned from the sale of an asset when the selling price exceeds its purchase price.