Consider the Following Two Companies

question 7

Multiple Choice

Consider the following two companies:
• Gilbert Corporation had a gross income of $500,000 in tax year 1, $150,000 in salaries, $30,000 in wages,
$20,000 in interest, and $60,000 in depreciation expenses for an asset purchased 3 years ago.
• Ajax Corporation has a gross income of $500,000 in tax year 1, and $150,000 in salaries, $90,000 in wages,
and $20,000 in interest expenses.
Apply the current tax rates and determine which of the following statements is correct.

• A) Both corporations will pay the same amount of income taxes in year 1.
• B) Both corporations will have the same amount of net cash flows in year 1.
• C) Ajax Corporation will have a larger net cash flow than Gilbert in year 1.
• D) Gilbert Corporation will have a larger taxable income than Ajax Corporation in year 1.

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Definitions:

Trait Approach

A theory of leadership that suggests leaders are born with certain traits or characteristics that predispose them to be successful leaders.

Leadership Definitions

Various explanations and interpretations of what leadership entails, reflecting different perspectives and emphases on the role and impact of leaders.

Leadership Effectiveness

The extent to which a leader is able to achieve desired results or objectives through the direction, motivation, and guidance of others.

Servant Leadership

A leadership philosophy that emphasizes the importance of leading by example and putting the needs of others first to foster their development.