Assume That Congress Recently Passed a Provision That Will Enable

question 25

Multiple Choice

Assume that Congress recently passed a provision that will enable Bev's Beverages Inc.(BBI) to double its depreciation expense for the upcoming year but will have no effect on its sales revenue or tax rate.Prior to the new provision, BBI's net income after taxes was forecasted to be $4 million.Which of the following best describes the impact of the new provision on BBI's financial statements versus the statements without the provision? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.

• A)The provision will reduce the company's net cash flow.
• B)The provision will increase the company's tax payments.
• C)Net fixed assets on the balance sheet will increase.
• D)The provision will increase the company's net income.
• E)Net fixed assets on the balance sheet will decrease.

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Definitions:

Aesthetic Needs

A psychological requirement for beauty and visually pleasing experiences, as part of Maslow's hierarchy of needs.

Hierarchy of Needs

A psychological theory proposed by Abraham Maslow that categorizes human needs into five hierarchical levels, from basic physiological needs to self-actualization.

Maslow's Hierarchy

A psychological theory proposed by Abraham Maslow that outlines a five-tier model of human needs, from basic (physiological) to more complex (self-actualization) needs.

Assumptions

Beliefs or ideas taken for granted without any proof or surety, often used as bases for reasoning and decision-making.