Question 13 Assume that a comp
Question 13 Assume that a company currently depreciates itsfixed assets over 7 years. Which of the following would occur if atax law change forced the company to depreciate its fixed assetsover 10 years instead? a. The company’s tax payment would increase.b. The company’s cash position would increase. c. The company’s netincome would increase. d. Answers a and c are correct. e. Answers band c are correct. 5 points Question 14 Harmeling Enterprisesexperience 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 expenseincreased. 5 points Question 15 Holmes Aircraft recently announcedan increase in its net income, yet its net cash flow declinedrelative to last year. Which of the following could explain thisperformance? a. The company’s interest expense increased. b. Thecompany’s depreciation expense declined. c. The company’s operatingincome declined. d. All of the statements above are correct. e.None of the statements above is correct. 5 points Question 16 Lastyear Aldrin Co. had negative net cash flow, yet its cash on thebalance sheet increased. What could explain these events? a. Aldrinissued long-term debt. b. Aldrin repurchased some of its commonstock. c. Aldrin sold some of its assets. d. Statements a and b arecorrect. e. Statements a and c are correct. 5 points
Answer:
13. Fir option A. Company tax payment will increase because herechanging depreciating years from 7 years to 10, here thedepreciation cost will reduce so profit will increase so taxincreased .
For option B . This changes will not effect the company cashposition.
For option C also correct, company income will increase becausethe depreciating cost is reducing..
For this question, the correct answer is option C .
14.Option A is not correct because Cost Goods Sold isincreasing,so it’s causes for reducing operating income aftertax.
Option B is not the answer, because reducing sales revenuecauses the decrease in operating income after tax.
Option C is not the answer because, increasing depreciationcauses increasing operating expenses .so increasing operatingexpenses causes decreasing operating income after tax.
Option D is not the answer because, increasing tax rate causesreduce operating income before tax.Incresing tax rate causesincreasing tax expenses.
Option E is the correct answer because interest expenses didn’teffect the operating income because interest expenses is a nonoperating expenses.
15. Option A is not the answer because, increasing interestexpenses causes decreasing net income.
Option B is the answer because, reducing depreciation causesincreasing profit and depreciation also a non cash expenses.
Option C is not the answer because, reducing operating incomecauses reducing net income also.It directly effect the netincome.
Option D and E is not correct.
Option B is the answer.
16. Option A .Issueing long term debt causes increasing cash inbalance sheet.It causes negative cash flow because we’re takingdebt.
Option B is not the answer because, repurchasing stock causesnegative cash inflows and reduce cash in balance sheet.
Option C is true because, selling assets will get causesnegative cashflow and increase cash in balance sheet.
Option D is not the answer
Option E is the answer
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