Incremental Research and Development Tax Credits

question 13

Multiple Choice

Incremental research and development tax credits

• A) allow firms to reduce the after-tax cost of their research and development activities.
• B) fund federal government insurance on a portion of research and development costs.
• C) generate revenues to subsidize government laboratories for research and development.
• D) are designed to reduce the amount of government regulatory restraints that limit innovation.
• E) fund a government prize for important industrial innovations.

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Definitions:

Direct Method

A cost allocation method that assigns all costs directly to cost objects without going through intermediate cost pools.

Prepaid Expense

Payments made in advance for goods or services that will be received in the future.

Direct Method

A method for preparing a cash flow statement where cash receipts and payments are reported directly, without using adjustments for non-cash items.

Selling Expense

Costs incurred to sell a product, including advertising, sales commissions, and other expenses directly related to the sales process.