Which of the Following Statements Is False

question 37

Multiple Choice

Which of the following statements is false?

• A) Other benefits from deferral arise because the firm effectively gains a real option to repatriate income at times when repatriation might be cheaper.
• B) By pooling foreign income, the firm effectively pays the combined tax rate on all foreign income.
• C) In years in which the Canadian tax rate exceeds the combined tax rate on all foreign income, the repatriation of additional income does not incur an additional Canadian tax liability, so the earnings can be repatriated tax-free.
• D) Deferring repatriation of earnings lowers the overall tax burden in much the same way that deferring capital gains lowers the tax burden imposed by the capital gains tax.

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Definitions:

Credit Memo

A credit memo is a document issued by a seller to a buyer, reducing the amount that the buyer owes the seller under the terms of an earlier invoice.

Perpetual Inventory System

An accounting method that records the sale or purchase of inventory immediately through computerized point-of-sale systems and Enterprise Resource Planning systems.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made at specific intervals, rather than continuously.

Purchases Discounts

Purchases discounts are reductions in price given by suppliers to buyers for early payment of invoices.