Question

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 are not affected, and assume that the same depreciation method is used for tax and stockholder reporting purposes.
a. Companies’/ s net operating profits after taxes (NOPAT) would decline.b. Companies’/ s physical stocks of fixed assets would increase.c. Companies’/ s net cash flows would increase.d. Companies’/ s cash positions would decline.e. Companies’/ s reported net incomes would decline.

Answer 1

Answer:

Option "D" is the correct answer to the following statement.

Companies' cash positions would decline.

Explanation:

The amount of money-on-hand listed on the financial results after the existing liabilities have been subtracted. Net cash is usually a measure of the cash flow status of a company at the close of a current period.

we can also identify a financial position by focusing on the free cash flow of an organization.

This Free Cash Flow can be identified by taking the operating cash flow of an organization and by deducting its short and long-term operating expenses.

Therefore, the Option "D" is the correct answer to the following question.