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 were not affected, and assume that the same depreciation method was used for tax and stockholder reporting purposes. a. Companies’ reported net incomes would decline. b. Companies’ after-tax operating profits would decline. c. Companies’ cash flows would increase. d. Companies’ cash positions would decline. e. Companies’ physical stocks of fixed assets would increase.

Answer 1

D

Step-by-step explanation:

Companies'cash position would decline

A cash position is the amount of cash that a company, investment fund, or bank has on its books at a specific point in time. If Congress, in an effort to increase tax revenue, passed legislation that forced companies to depreciate equipment over longer lives the amount of cash that a company has will decline