Which of the Following Is Likely to Be a Fully

question 49

Multiple Choice

Which of the following is likely to be a fully deductible business expense?

• A)Salaries in excess of the industry average paid to attract talented employees.
• B)The cost of employee uniforms that can be adapted to ordinary personal wear.
• C)A speeding fine paid by a trucker who was delivering a rush order.
• D)The cost of a three-year subscription to a business publication.
• E)None of the choices are likely to be deductible.

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Definitions:

Net Present Value

The calculation used to determine the current worth of a future stream of cash flows, adjusted for the time value of money.

Depreciation Tax Shield

The reduction in income taxes that results from taking a deduction for depreciation on the company's tax return, effectively reducing taxable income.

Cash Outlays

Payments in cash for expenses or investments made by a business or individual.

Auto Leases

Contracts that allow a person to use a car for a set period of time in exchange for regular payments, without owning the vehicle.