Question

Question 13 Assume that a company currently depreciates its fixed assets over 7 years. Which of the following would occur if a tax law change forced the company to depreciate its fixed assets over 10 years instead? a. The company's tax payment would increase. b. The company's cash position would increase. c. The company's net income would increase. d. Answers a and c are correct. e. Answers b and c are correct. 5 points Question 14 Harmeling Enterprises experience a decline in net operating profit after taxes (NOPAT). Which of the following definitely cannot help explain this decline? a. Costs of goods sold increased. b. Sales revenues decreased. c. Depreciation increased. d. Taxes increased. e. Interest expense increased. 5 points Question 15 Holmes Aircraft recently announced an increase in its net income, yet its net cash flow declined relative to last year. Which of the following could explain this performance? a. The company's interest expense increased. b. The company's depreciation expense declined. c. The company's operating income declined. d. All of the statements above are correct. e. None of the statements above is correct. 5 points Question 16 Last year Aldrin Co. had negative net cash flow, yet its cash on the balance sheet increased. What could explain these events? a. Aldrin issued long-term debt. b. Aldrin repurchased some of its common stock. c. Aldrin sold some of its assets. d. Statements a and b are correct. e. Statements a and c are correct. 5 points

Answer 1

13. Fir option A. Company tax payment will increase because here changing depreciating years from 7 years to 10, here the depreciation cost will reduce so profit will increase so tax increased .

For option B . This changes will not effect the company cash position.

For option C also correct, company income will increase because the depreciating cost is reducing..

For this question, the correct answer is option C .

14.Option A is not correct because Cost Goods Sold is increasing,so it's causes for reducing operating income after tax.

Option B is not the answer, because reducing sales revenue causes the decrease in operating income after tax.

Option C is not the answer because, increasing depreciation causes increasing operating expenses .so increasing operating expenses causes decreasing operating income after tax.

Option D is not the answer because, increasing tax rate causes reduce operating income before tax.Incresing tax rate causes increasing tax expenses.

Option E is the correct answer because interest expenses didn't effect the operating income because interest expenses is a non operating expenses.

15. Option A is not the answer because, increasing interest expenses causes decreasing net income.

Option B is the answer because, reducing depreciation causes increasing profit and depreciation also a non cash expenses.

Option C is not the answer because, reducing operating income causes reducing net income also.It directly effect the net income.

Option D and E is not correct.

Option B is the answer.

16. Option A .Issueing long term debt causes increasing cash in balance sheet.It causes negative cash flow because we're taking debt.

Option B is not the answer because, repurchasing stock causes negative cash inflows and reduce cash in balance sheet.

Option C is true because, selling assets will get causes negative cashflow and increase cash in balance sheet.

Option D is not the answer

Option E is the answer