In Basic Terms,a Business Must Earn a Return on Capital

question 2

True/False

In basic terms,a business must earn a return on capital that exceeds the cost of capital.

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Definitions:

Deferred Tax Assets

Deferred tax assets are items on the balance sheet that reduce future tax obligations because of overpayment or advance payment of taxes or future tax benefits due to allowable temporary differences.

Book Income Tax Expense

The amount of income tax expense that is reported on the financial statements, which may differ from the actual tax paid due to differences between accounting and tax rules.

Temporary Difference

A difference between the carrying amount of an asset or liability in the balance sheet and its tax base, which will result in taxable or deductible amounts in the future.

Book Income

The income of a business as reported in its financial statements, using the accounting methods and standards specified by the relevant authority.