Windsor Company Has Net Temporary Differences Between Tax and Book

question 7

Multiple Choice

Windsor Company has net temporary differences between tax and book accounting of $80 million, resulting in a deferred tax liability of $28 million. An increase in the tax rate would have the following impact on deferred taxes and net income: $$\begin{array} { | l | c | c | } \hline & \text { Deferred Taxes } & \text { Net Income } \\\hline \text { A) } & \text { Increase } & \text { No effect } \\\hline \text { B) } & \text { Increase } & \text { Decrease } \\\hline \text { C) } & \text { No effect } & \text { No effect } \\\hline \text { D) } & \text { Decrease } & \text { No effect } \\\hline\end{array}$$

• A) Choice A
• B) Choice B
• C) Choice C
• D) Choice D

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Definitions:

Theories of Motivation

Psychological theories that seek to explain how and why people are motivated to act in certain ways, including needs, desires, and goals.

Drive Theories

Theories suggesting that motivation is primarily based on the needs to reduce internal states of tension and restore homeostasis.

Clark Hull

An influential psychologist known for his drive-reduction theory of learning and motivation within the behaviorist framework.

Primary Motive

Fundamental drives or motivations that are biological in nature, such as hunger, thirst, or the need for sleep.