Which of the Following Would Be Most Likely to Occur

question 125

Multiple Choice

Which of the following would be most likely to occur in the year after Congress,in an effort to increase tax revenue,passed legislation that forced companies to depreciate equipment over longer lives? Assume that sales,other operating costs,and tax rates were not affected,and assume that the same depreciation method was used for tax and stockholder reporting purposes.

• A) Companies' after-tax operating profits would decline.
• B) Companies' physical stocks of fixed assets would increase.
• C) Companies' cash flows would increase.
• D) Companies' cash positions would decline.
• E) Companies' reported net incomes would decline.

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