ECO 1192 Study Guide - Midterm Guide: Mansfield, Finished Good, Financial Statement
Document Summary
A business should maintain accurate depreciation records of capital assets to track the value of its fixed (physical) assets. reflect all production costs. accurately determine its income tax credits or liabilities. The declining balance (db) depreciation method is always preferred to the. Straight line (sl) depreciation method because the db method fully and more rapidly depreciates a fixed asset than the sl method: true, false. Smaller depreciation charges lead to more taxable income, smaller tax liabilities and smaller after-tax cash flows. Smaller depreciation charges lead to less taxable income, smaller tax liabilities and smaller after-tax cash flows. Higher depreciation charges lead to less taxable income, larger tax liabilities and larger after-tax cash flows. Higher depreciation charges lead to less taxable income, smaller tax liabilities and larger after-tax cash flows. None of the above answers. b) c) d) A company"s annual income taxes are considered explicit cash flows while its annual depreciation charges are implicit cash flows.
