Which of the Following Statements Is True

question 63

Multiple Choice

Which of the following statements is true?

• A) In determining if a valuation allowance is needed, positive evidence is considered more persuasive than negative evidence.
• B) In determining if a valuation allowance is needed, negative evidence is considered more persuasive than positive evidence.
• C) In determining if a valuation allowance is needed, negative and positive evidence must be evaluated equally.
• D)In determining if a valuation allowance is needed, only negative evidence is evaluateD.Both positive and negative evidence must be evaluated equally in determining if a valuation allowance is necessary.

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Definitions:

Bonds Outstanding

Refers to all the bonds issued by a company that are still in circulation and have not yet been redeemed.

Tax Rate

The cut of profits or earnings that governmental entities subtract as tax from companies or persons.

Debt-Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by its stockholders' equity.

Pre-Tax Cost

The cost of an investment or expense before the deduction of taxation.