If Tax Rates Are Decreasing

question 107

Multiple Choice

If tax rates are decreasing:

• A) taxpayers should accelerate income
• B) taxpayers should defer deductions
• C) taxpayers should accelerate deductions
• D) taxpayers should defer deductions and accelerate income
• E) None of these

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Definitions:

Times Interest Earned

A ratio assessing a firm's capability to fulfill its debt responsibilities through the comparison of its earnings before interest and taxes against its interest expenditures.

Company's Risk

Refers to the inherent uncertainties and potential financial losses a company faces in the course of its operations.

Employer Payroll Taxes

Taxes that employers are required to pay on behalf of their employees, including Social Security and Medicare taxes, federal and state unemployment insurance.

Note Payable

A documented commitment to repay a certain sum of money, typically including interest, at a predetermined time in the future.