Using the T-Account Approach

question 75

Multiple Choice

Using the T-account approach:

• A)Net income appears on the debit side of the Cash account under operating activities.
• B)Payment of long-term debt appears on the debit side of the Cash account under financing activities.
• C)Purchase of equipment appears on the credit side of the Cash account under operating activities.
• D)An increase in Accounts Receivable appears on the debit side of the Cash account under operating activities.

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Definitions:

Applicable Tax Rate

The applicable tax rate is the percentage at which an individual or corporation is taxed, varying depending on income, profit, or transaction values.

Incremental Cash Flows

The additional cash flow a company generates from a particular investment or project, compared to not undertaking the project.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

MACRS

MACRS, or Modified Accelerated Cost Recovery System, is a method of depreciation in the United States that allows for faster asset expense recovery over time for tax purposes.