The Tax Savings of the fiRm Derived from the Deductibility

question 36

Multiple Choice

The tax savings of the firm derived from the deductibility of interest expense is called the:

• A)interest tax shield.
• B)depreciable basis.
• C)financing umbrella.
• D)current yield.
• E)tax-loss carryforward savings.

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Definitions:

Dual Effects Concept

The principle that every transaction has at least two effects on the financial statements - one that increases a category and another that decreases another category, maintaining the balance.

Transaction

An event or activity that impacts the financial position of a company, typically involving the exchange of goods, services, or money.

Relevant

Relevant, in a financial or accounting context, refers to information that is applicable and helpful for decision-making purposes.