Assume Both Current and Deferred Taxes Are Positive Values

question 49

Multiple Choice

Assume both current and deferred taxes are positive values.Given this,deferred taxes will

• A)reduce the current tax expense and thus increase net income.
• B)increase expenses and increase operating cash flows.
• C)increase expenses and lower operating cash flows.
• D)reduce net income but not affect the operating cash flows.
• E)reduce both net income and operating cash flows.

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Definitions:

Stock-Index Futures

Futures contracts based on stock indices, which allow investors to speculate on the future value of an index.

Sell

The action of transferring ownership of a security or asset to a buyer for an agreed price.

Long Position

The purchase of a security such as a stock or commodity with the expectation that the asset will increase in value.

Futures Contract

A formal contract for purchasing or selling an item at a pre-set price at a future date.