As Seen on an Income Statement

question 81

Multiple Choice

As seen on an income statement,

• A)interest is deducted from income and increases the total taxes incurred.
• B)depreciation reduces both the pretax income and the net income.
• C)depreciation is shown as an expense but does not affect the taxes payable.
• D)the tax rate is applied to the earnings before interest and taxes when the firm has both depreciation and interest expenses.
• E)both dividends and interest expense reduce corporate income taxes.

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Definitions:

Cost Control

The practice of managing and reducing business expenses through efficient use of resources.

Ending Inventory Policy

A company's method for valuing goods remaining unsold at the end of an accounting period.