If a Firm Pays Taxes,which One of These Will Reduce

question 64

Multiple Choice

If a firm pays taxes,which one of these will reduce net income but increase cash flow?

• A) Depreciation expense
• B) Income taxes
• C) Cash sales
• D) Interest expense

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Definitions:

Social Cost

The total cost to society as a whole, including both private costs incurred by firms or individuals and external costs imposed on others.

Free Riders

A person who receives the benefit of a good without paying for it. Because it is often virtually impossible to restrict the consumption of public goods to those who pay, these goods are subject to free-rider problems.

Public Good

A commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Private Firms

Businesses owned and controlled by individuals or groups of individuals, as opposed to being owned by the government.