XYT Company Engaged in a Transaction That Generated $50,000 Cash

question 36

Multiple Choice

XYT Company engaged in a transaction that generated $50,000 cash deposited in the company bank account and required the company to pay $12,000 out of that account. XYT's marginal tax rate is 30%. Which of the following statements is false?

• A) If the deposit is taxable income and the payment is deductible, the transaction generated $26,600 after-tax cash flow.
• B) If the deposit is taxable income but the payment is nondeductible, the transaction generated $35,000 after-tax cash flow.
• C) If the deposit is not taxable income and the payment is nondeductible, the transaction generated $38,000 after-tax cash flow.
• D) None of these choices are false.

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Definitions:

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