Assume That Bev's Beverages Inc

question 17

Multiple Choice

Assume that Bev's Beverages Inc.(BBI) can double its depreciation expense for the upcoming year while sales revenue and tax rate remain unchanged.Prior to the change,BBI's net income after taxes was forecasted to be $4 million.What impact will this change have on BBI's financial statements? Assume that the company uses the same depreciation method for tax and shareholder reporting purposes.

• A)The provision will reduce the company's net cash flow.
• B)The provision will increase the company's tax payments.
• C)Net fixed assets on the balance sheet will increase.
• D)Net fixed assets on the balance sheet will decrease.

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