In the 2009 Income Statement for Foxtrot Co

question 26

Multiple Choice

In the 2009 income statement for Foxtrot Co., it would report:

• A)All income taxes would be combined into one line item.
• B)Income taxes would be separated for continuing and discontinued operations.
• C)Income taxes would be reported for income and gains only.
• D)None of these is correct.

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Definitions:

Debt-Equity Ratio

A financial indicator showing the relationship between borrowed funds and equity in a company's asset financing.

Taxable Income

The portion of an individual's or company's income used to determine how much tax will be owed to the government.

Interest Tax Shield

The reduction in income taxes that results from taking an allowable deduction for interest expenses.

Interest Tax Shield

The decrease in income taxes that occurs by subtracting a permitted deduction, like debt interest, from taxable income.